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Although you can't literally lower your tax rate, there are certain actions you can take that will have a similar result. These include:
When we say "tax bracket," we're referring to the highest federal tax rate that you pay on any of your taxable income. This is the rate that will apply to each additional dollar that you earn, until you earn so much that you graduate to the next bracket. You need to know your current tax bracket in order to make wise tax planning decisions, since many decisions will make sense for those in certain brackets, but not for those in others.
In 2011 and 2012, there continue to be six tax brackets for individuals:
The dollar amounts at which each bracket begins is different for each filing status (that is, whether you file as single, head of household, married filing jointly, or married filing separately) and are adjusted for inflation each year.
The following chart shows the income thresholds at which each tax bracket begins for 2011. Note that the dollar amount does not refer to your gross income, but rather, your taxable income that is, income after you've subtracted any deductions and personal exemptions to which you're entitled.
|2011 Individual Income Tax Brackets|
|Tax Rate||Single||Married/Joint||Married/Separate||Head of Household|
|15%||$ 8,700||$17,400||$ 8,700||$12,400|