I'm wondering if there is still some disconnect here on tax rate, due to the difference between the nominal tax bracket and the (higher) marginal tax rate caused by the "SS tax hump."[. . .] Under the scenario above, is there any room still left in the 10% bracket? Are you willing to go into the 12% bracket? Not suggesting all the way to the top of the 12% bracket because that would make your long term capital gains and qualified dividends taxable.Thanks very much for your detailed response. The calculators did include SS computations. Taking into account taxable portion of SS, interest, dividends, LTCG from withdrawals from taxable account and 15K TIRA distribution I'd technically be in the 10% bracket [. . .]
The wiki's "heat map" for 2024 MFJ and 42K of SS shows that there is no "true" 10% bracket space left: the 10% nominal tax bracket is completely overlaid with with the 18.5% marginal rate portion of the SS tax hump.
Similarly, the lower portion of the 12% nominal tax bracket is overlaid by the 22.2% marginal rate portion of the SS tax hump. (Although there is quite a bit of true 12% rate above that (before taking into account any LTCG/QD 27% marginal rate effect.))
(*I think I managed to link to the 2024 version of the MFJ heat map, but the files names are confusing, so I'm not 100% sure. It is the one that was updated on 3/21/2024. It looks like fyrce already updated the one visible in the wiki to use 2025 numbers. Wiki article: "Taxation of Social Security Benefits.")
Statistics: Posted by cas — Mon Dec 09, 2024 10:44 am — Replies 13 — Views 1415