Using Marginal Taxes in a Plan

How to turn on Marginal Taxes in a Plan

The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify. In essence, it is the percentage taken from your next dollar of taxable income above a pre-defined income threshold.  When Marginal Taxes have been turn on, there is no longer an income tax tab within Taxes. You will only see tabs for Capital Gains, State Tax, and Marginal Taxes.

When Marginal Taxes have been turned off, a fixed rate is applied to the income taxes for the plan (Combined Federal and State Rate).  This fixed rate can be adjusted and modified based on the Start Year and End Year dates.

Understanding the Marginal Taxes tab

When viewing Marginal taxes in a plan, you are viewing which incomes are used for the tax calculation, and which incomes are used to satisfy goals in the plan. Recall that the incomes used for the tax calculation are selected in the client’s profile. This allows for a more comprehensive tax picture in plans that want to use only select income streams. To edit the incomes in the plan, simply go to the Income tab in the plan. To edit the incomes used in the tax calculation, go to the Taxes tab inside the client’s Profile.

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