Is my income tax bracket based on gross income or AGI? What other factors can affect what my income tax bracket can be if I'm teetering close to two brackets?

  • ooc - why are you worried about which bracket(s) you fall into?
    – warren
    Nov 27, 2012 at 15:26
  • @warren did you really just ask that? 15% vs (possibly) 28% in Federal taxes between two brackets. If I have a choice to defer receiving income and instead put it an investment which that money is seen as 'taxable', and it keeps me at 15% instead of 28%, I'd rather go that route. Nov 27, 2012 at 17:13
  • the bracket only affects the income which falls into that bracket - it's not like if you earn a dollar into the 28% realm you get taxed at 28% on everything
    – warren
    Nov 27, 2012 at 18:47
  • it's the principle of 28% of something vs 28% of nothing. I don't feel like allowing myself to be robbed in this lifetime ;) Nov 28, 2012 at 14:04
  • you could always take a lower-paying job ;) ... on a serious note, while it is [almost] always advantageous to reduce your tax load, that shouldn't be your main driving factor: you should be trying to maximize your income within your limits of work-life balance, too :)
    – warren
    Nov 28, 2012 at 17:12

1 Answer 1


Neither. A Look at Form 1040 will show you the math by which taxable income is calculated. 22 lines to get to your total income. 37 to your adjusted gross, 61 to your taxable income. (Note, there are tax credits that may appear in the remaining lines, which can wipe out any or all of the tax bill of line 61. You can be in the 10% bracket, but have Uncle Sam pick up the remaining tab.) For most people in the US, personal exemptions and the standard deduction are the two largest reductions to one's income. For the next group, it's the Schedule A that will tally enough deductions to exceed the standard deduction and the taxpayer benefits from "itemizing." The recent Question Could a 401k or IRA contribution switch my current taxable income to a lower tax bracket? is this the same for traditional and Roth 401k? should answer how you know your bracket once you arrive at your taxable income.

  • 1
    ahh so your income tax bracket is based on the labeled "Taxable income" and that comes even after AGI is calculated. Am I correct in this? Nov 26, 2012 at 17:10
  • 1
    Yes. And as I just edited, even then, credits can wipe out some of that bill. Nov 26, 2012 at 17:16

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .