How can I determine my Marginal and Effective tax rates from my previously filed tax forms?

Looking at your tax forms, here's how you can find both rates: For your Marginal Rate - look at page 2 of your 1040 form where it shows your taxable income (line 15). This tells you which tax bracket you fall into. For 2023, find where your amount fits on the tax tables for married filing jointly. The percentage of the highest bracket your income falls into is your marginal rate - basically the tax you'd pay on one more dollar of income. For your Effective Rate - this is simpler! Take your total tax (line 24 on the 1040) and divide it by your total income (add your W-2 wages and your Schedule C net profit). This percentage shows what portion of your total income went to federal income taxes. Keep in mind this is just for federal income tax - it doesn't include FICA taxes (Social Security and Medicare) that you pay on both your W-2 income and self-employment income.

After struggling with the exact same question last year, I found this super helpful tool at https://taxr.ai that completely solved this problem for me. I uploaded my tax forms and it automatically calculated both my marginal and effective tax rates, plus it broke down all the different components (income tax, SE tax, etc). The best part was it showed me how adding more income would affect both rates - really helped me plan my side hustle income for this year. It also explained the difference between the rates in simple terms I could actually understand!

Just wanted to follow up - I finally tried the taxr.ai tool that was mentioned and wow, it was eye-opening! I uploaded my return and instantly saw that my marginal rate was 24% but my effective rate was only 14.7% when including all taxes. The visualization showing how different income sources were taxed differently really helped me understand why my side gig income feels so heavily taxed. Definitely recommend it if you're trying to figure this out.

If you're still struggling with understanding your tax situation, I'd highly recommend getting on the phone with the IRS directly. They can walk you through your specific forms. The problem is it's nearly impossible to get through to them these days - I tried for weeks last year with no luck. Then I found https://claimyr.com which literally got me connected to an IRS agent in under 45 minutes after I'd been trying for days on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent explained exactly how to read my tax forms to understand both rates and cleared up some other questions I had about my Schedule C expenses.

I need to eat my words. After posting my skeptical comment yesterday, I decided to try Claimyr out of pure curiosity. I was absolutely certain it wouldn't work, but I got a call back in about 35 minutes and was connected to an actual IRS agent. I asked specifically about calculating tax rates from completed returns, and the agent walked me through exactly where to look on my 1040 and Schedule SE. Much more helpful than waiting on hold for hours or trying to decipher IRS publications. Sometimes it's worth admitting when you're wrong!

Don't forget that the marginal rate only applies to federal income tax. Your "true" marginal rate is higher when you factor in the 15.3% self-employment tax (though half is deductible). And if you're in a state with income tax, that adds another layer. For my side hustle, my "all-in" marginal rate is close to 45% when everything is combined!

Here's a super simple way I calculated mine: Marginal rate: Look at the tax bracket where your last dollar of income falls. For married filing jointly in 2023, if your taxable income was between $89,451 and $190,750, your marginal rate is 22%. Effective rate: Line 24 (total tax) ÷ Line 9 (total income) × 100 = your percentage

Great question! As someone who also has both W-2 income and self-employment income, I can relate to the confusion around calculating these rates properly. Here's what I've learned from my own experience: **For Marginal Rate:** Find your taxable income on line 15 of your 1040, then look up which tax bracket that puts you in for married filing jointly. That bracket percentage is your marginal rate for federal income tax. But remember, any additional self-employment income will also be subject to the 15.3% self-employment tax (though you get to deduct half of it). **For Effective Rate:** This is where it gets tricky with self-employment income. You want to divide your total tax burden by your total income. So add up: - Line 24 (total tax from 1040) - Line 4 from Schedule 2 (self-employment tax) Then divide that sum by your total income (W-2 wages + net profit from Schedule C). One thing that really helped me understand this better was realizing that my effective rate tells me what I actually paid on average, while my marginal rate tells me what I'd pay on the next dollar I earn. This distinction is super important for planning whether to take on more consulting work! The self-employment tax piece definitely makes it more complex than just having W-2 income, but once you understand the components, it becomes much clearer.