Your Overall Tax Bracket
This is exactly as it sounds; it's an average figure based on the total amount
of tax you pay compared to your gross taxable income. Thus, if you paid $5,000
in federal taxes, and your gross taxable income was $33,400 as a married filer,
your Overall Tax Bracket would be 15%. In effect, you paid 15% of your gross
taxable income to the federal government. So, everything else being equal,
you could budget that amount as your reserve for federal taxes.
The same type of analysis applies for state income taxes paid. If your state
tax amounted to $1,000 in the above example, your Overall Tax Bracket would
be 3% before allowance for federal deductibility of these state taxes.
Please contact Topolinski & Associates regarding more information
on this topic.
