What is a marginal tax rate?

There is a fair amount of confusion about what a marginal tax rate is and how it affects how much tax you would owe the government on a certain amount of income. These graphs are here to help you better understand the difference between a marginal and average tax rate and to easily calculate these rates for specific examples in the US context. This tool only looks at US Federal Income taxes and ignores state, local and Social Security/Medicare taxes.

Marginal tax rates are the rate at which an additional dollar of income will be taxed at. There are different tax brackets (each with its own marginal rate) depending on which dollar of income you are looking at. This is very different from the Average (or effective) tax rate that is the result of applying these marginal tax rates across all of your income.

**Click Here to view other financial-related tools and data visualizations from engaging-data**

Instructions for using the visual tax calculator:

• Select filing status: Single, Married Filing Jointly or Head of Household. For more info on these filing categories see the IRS website
• Select percentage of regular income vs capital gains income. Regular income is wage or employment income and is taxed at a higher rate than capital gains income. Capital gains income is typically investment income from the sale of stocks or dividends and taxed at a lower rate than regular income.
• Move your cursor or click on the graph to select a specific income Make sure you note that the x-axis is a logarithmic-scale, meaning that income grows exponentially as you move to the right.
• Choose your graph preference One graph (Individual Tax Brackets) shows the individual tax brackets and how much of your income is taxed at the different marginal rates. The other graph (Aggregate Rates) shows the net result of applying the different rates to get your effective rate.

Here are two tables that lists the marginal tax brackets in the United States in 2019 that form the basis of the calculations in the calculator. 2018’s numbers are pretty similar.

 
You can see that tax rates are much lower for capital gains in the table below than for regular income (table above).

For those not visually inclined, here is a written description of how to apply marginal tax rates. The first thing to note is that the income shown here in the graphs is taxable income, which simply speaking is your gross income with deductions removed. The standard deduction for 2019 range from $12,200 for Single filers to $24,400 for Married filers.

• If you are single, all of your regular taxable income between 0 and $9,700 is taxed at a 10% rate. This means that your all of your gross income below $12,200 is not taxed and your gross income between $12,200 and $21,900 is taxed at 10%.
• If you have more income, you move up a marginal tax bracket. Any taxable income in excess of $9,700 but below $39,475 will be taxed at the 12% rate. It is important to note that not all of your income is taxed at the marginal rate, just the income between these amounts.
• Income between $39,475 and $84,200 is taxed at 24% and so on until you have income over $510,300 and are in the 37% marginal tax rate . . .
• Thus, different parts of your income are taxed at different rates and you can calculate an average or effective rate (which is shown in the aggregate rates graph).
• Capital gains income complicates things slightly as it is taxed after regular income. Thus any amount of capital gains taxes you make are taxed at a rate that corresponds to starting after you regular income. If you made $100,000 in regular income, and only $100 in capital gains income, that $100 dollars would be taxed at the 15% rate and not at the 0% rate, because the $100,000 in regular income pushes you into the 2nd marginal tax bracket for capital gains (between $39,375 and $434,550).

 
Data and Tools:
Tax brackets and rates were obtained from the IRS website and calculations were made using javascript and plotted using the plot.ly open source javascript plotting library.

This is a simple age calculator that calculates your age down to the second.

The age calculator should be relatively self-explanatory, just enter your birthdate into the tool.  You can also enter the time of birth (if you want to), otherwise it will assume you were born at midnight.

• The first (“Numerical Age“) is a table that shows the number of years, months, days, hours, minutes and seconds since you were born. It also shows how long it will be until your next birthday.  You can also use the Start Clock button to see your age change each second.
• The second (“Graphical age“) is a figure that shows your age in the context of a 90 year lifespan.  Each block shown is one week and there are 52 weeks (blocks) in a year (row) and 10 years (rows) per decade (group of blocks).

This visualization is based on the the very interesting Wait But Why post “Your Life in Weeks” by Tim Urban.  It’s a bit humbling to see your life laid out in this way, and to think about how you will spend the (hopefully many) remaining weeks of your life.

You can click the URL button to create a URL that is based on the your birthday (so you don’t have to type it in again).  Just copy the URL in the address bar at the top of your browser (after pressing the button) to share with others.

Programming: this program was written in javascript and uses the moment.js library to simplify the date calculations.

When can I retire and how long do I need to save before I can retire?

That’s the key question! This interactive fire calculator was built to let you play with the inputs and help you understand how savings rate and retirement spending strongly determine how long it will take you to save up for retirement. Note: it does not simulate the post-retirement period when you start to draw down your savings. That can be done on this post-retirement fire calculator (Rich, Broke or Dead) which compares the frequency of various outcomes in retirement (running out of money, ending up with way too much money, and life-expectancy).

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Update: June 2025 – bug fix in how tax rate on additional income is applied. If you have a lot of additional income, your success rate will likely go down.

Updated Shiller returns and inflation dataset through beginning of 2024

Rich, Broke or Dead?

One of the key issues with retiring is ensuring that the money you have saved will not be exhausted during your retirement. This is also known as Longevity Risk and is especially important if you want to retire early, since your retirement could be 50 years long (or more). This interactive post-retirement fire calculator and visualization looks at the question of whether your retirement savings can last long enough to support your retirement spending and combines it with average US life expectancy values to get a fuller picture of the likelihood of running out of money before you die.

It helps to answer the question: If I start out with $X dollars at the beginning of my retirement, will I run out of money before I die?

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Disculpe(n) mi pobre español. Utilicé google translate para escribir esto en español.
Aquí está la calculadora que calculará cuánto tiempo lleva contar un millón (o números mayores) en español.
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This is an update to the Financial Freedom Calculator. That one still works well, but this version adds the ability to add multiple savings amounts representing different periods in time. This allows you to visualize your progress towards financial freedom rather than just giving you the latest value for your freedom date. It does so by showing different colors for the different periods (you specify them by adding different savings amounts and names). It should be fairly obvious looking at the calculator, but if you had a total of 25000 in savings in 2016 and 70000 in 2017, then your calculator is colored in two sections representing the freedom days you had achieved in the two different years.
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