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Despite brand new tax rate reductions from the Jobs and Growth Tax Relief Reconciliation Act of 2003, the superior marginal tax bracket for many retirees is a whopping 46.3%. Why? Because Social Security benefits are subject to income income tax. Those affected are Social Security recipients who have enough good fortune (misfortune?) pertaining to being subject to both the 25% taxes bracket and also the 85% inclusion rate for Social Security benefits.

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What it is actually accepted as your 'income' tax has few of tax brackets each featuring a own tax rate from 10% to 35% (2009). These rates are placed on your taxable income which is income for over your 'tax free' income.

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