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Revision as of 20:09, 2 September 2026


Despite the actual tax rate reductions belonging to the Jobs and Growth Tax Relief Reconciliation Act of 2003, the top marginal income tax bracket for many retirees is often a whopping forty six.3%. Why? Because Social Security benefits are subject to income income tax. Those affected are Social Security recipients who purchase the good fortune (misfortune?) always be subject to both the 25% income tax bracket as well as the 85% inclusion rate for Social Security benefits.

Remember, a personal exemption of $3650 isn't deducted on tax but on your taxable income. Say for example your filing status is 'married filing jointly' with original taxable income of $100,000. This makes you under the marginal tax rate of 25%. Therefore the money you will save on personal exemption is $912.50 (calculation is simple: $3650 multiplied by 25%). For the spouse, which will be multiplied by two which means you save $1825.

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