Your marginal tax rate is the rate you’ll pay on your next dollar of income, so in your planning, it’s important to know what it likely will be. Last year, the tax brackets underwent significant changes under the Tax Cuts and Jobs Act (TCJA).
Pay attention to thresholds
Under the TCJA, graduated tax rates for corporations were replaced with one flat rate. (See Chart 7.) When businesses are structured as flow-through entities, income is taxed at the owners’ individual rates. So there are now some big differences between tax rates for corporations and pass-through entities
(though a powerful deduction for pass-throughs is available).
For individuals, the taxable income thresholds vary significantly based on filing status. The thresholds for estates and trusts are much lower. There are also AMT rates to consider.
