Your personal tax brackets!

Note: We just added parallel graphs for 2020 so you can see how the 1.6% COLA changes in tax and Social Security levels effected your personal sweet spot.

Click on the following Radio Buttons to see how your Personal Tax Brackets are changed based on the tax year, your marital status, your Social Security benefit level and if you also have Long Term Capital Gain income.

2019 Single 20K 25K 30K 35K 40K Yes
Benefit Amount LTCG or QD
2020 Married 40K 50K 60K 70K 80K No

Note how the rates shift to the left when you click the Married radio button. The ďmarriage penaltyĒ was removed from our tax brackets in 2002, but not from the taxability of our Social Security benefits established in 1983 and 1993. Individuals start paying taxes on their benefits at the $25,000 ďbasisĒ level. Domestic Partners would start at a combined $50,000 level, but a married couple starts paying taxes on their benefits at $32,000, hence the shift in the Taxable SS and marginal tax rate lines!

  • The size and shape of your personal marginal tax rates depends on your personal Social Security benefit level, your marital status, and your sources for retirement income, so click on these radio buttons to see how they change your tax rates.
  • Note the Ordinary Income entry at the top left of each graph is what defines the Gross Income tick mark at the top end of your Personal Sweet Spot before you start paying your 40.7% and 49.95% Marginal Tax Hump.
  • Also Note the solid green Save line which illustrates how much Federal tax you are saving before you start paying taxes, how much you give back when you start paying normal taxes, and how much you give back when you start paying your Hump Taxes.

All of these images are created on the same fixed gross income scale so that you can see how each click in the form changes your personal tax rates. The scale is exactly double for a married couple so that it represents the per person tax rates.

Note how the position and width of your personal tax hump remains relatively constant when you add LTCGs. The start of your taxation shifts to the right because the gains are tax delayed. The actual start of the taxation of your gains occurs $100 before the start of your 22% federal bracket if single, $200 if married, so the actual start of your personal tax hump starts $54 earlier, but that amount is so small you canít actually see it on the graph. (85% of $54 is $46; $54 + $46 = $100)

Your Personal Sweet Spots

SSB$20,000$25,000$30,000$35,000$40,000
Other$37,418$36,270$35,121$33,972$32,824
Gross$57,418$61,270$65,121$68,972$72,824
Taxes$4,543$4,543$4,543$4,543$4,543
After Fed$52,875$56,727$60,578$64,429$68,281
Hump$1,288$4,936$8,585$12,234$15,882
Taxes$524$2,009$3,494$4,979$6,464

Now letís take a look at your Personal Sweet Spots from another perspective. We start with 2019 the numbers from the images we just displayed for the single individual with no Long Term Capital Gains, and then we convert those numbers into a graph to get a better view of what is happening.

As the blue Social Security Benefit line increases, the purple Other taxable Income line slowly decreases, while your desired green After Federal Tax retirement lifestyle Sweet Spot line increases at almost the same rate as your Social Security.

The problem we could face in this example is that the red Hump Size line also increases with our desired retirement lifestyle! The longer you wait to start your SS benefits, the higher the retirement lifestyle you can afford, but as this happens, the higher the roadblock gets for you to go any further. This entire website is designed to help you to recognize how that happens and how to make the proper plans to avoid this problem.

SSB$50,000$60,000$70,000$80,000
Other$63,449$60,459$58,162$55,864
Gross$113,449$120,459$128,162$135,864
Taxes$9,086$9,086$9,086$9,086
After Fed$104,363$111,373$119,076$126,778
Hump$0$6,482$13,779$21,077
Taxes$0$2,638$5,608$8,578

Married Couples face a special situation that we will discuss in more detail in the later pages of this website. For now just notice that the Other Income that you can receive before entering your Personal Tax Hump is considerably higher for the married couple. The problem with this relates to what your surviving spouse will have to deal with. If your other income is guaranteed and inherited by the surviving spouse, the survivor will revert to the IRS single Tax Brackets and the single Other Income limits in the first table which will force them into their Personal Tax Hump when their spouse passes away. Like we just said, we will discuss this in greater detail later!

We've seen the effect of Marginal Tax Brackets on Social Security Benefits in $5,000 increments, now letís take a look at how your personal benefit level is determined.

Next - How your personal SS benefits are calculated!