[mookiemookie]

Originally Posted by AVGWarhawk

I'm listening professor. Tell me how tax credits work and how much tax is paid by the marginal income folks.

Shamelessly stolen from here: http://www.fivecentnickel.com/2010/0...ost-you-money/

Consider a single individual earning $50,000. This puts him in the 25% tax bracket. That does not, however, mean that he pays 25% taxes on his full taxable income. Rather, he pays 10% on the first $8375 (bucket #1), 15% on the next $25,625 (bucket #2) and 25% on the remainder of his income (a partially filled bucket #3). In total, this works out to $8681.25 in taxes, or a “real” rate of roughly 17.4% (ignoring deductions, credits, and other adjustments).

If this individual got a big raise that pushed him into the 28% tax bracket, he wouldn’t lose anything. He’d pay 25% on the balance of bucket #3 (up to $82,400) and then 28% thereafter (until he hit the 33% bracket).