I don't understand the Marginal Bracket Percentage Shown in Scenario Analysis.
WHERE DOES THE MARGINAL TAX NUMBER COME FROM?
It is NOT as simple as taking the Taxable Income and plugging that into the marginal tax table!
This is the marginal rate at which the next $1 of ordinary income will be taxed. Taxable income often includes items that are taxed at different rates, such as Long Term Capital Gains or Qualified Dividends. To determine the marginal tax bracket for ordinary income, these other sources of income must be backed out.
The rate at which capital gains and qualified dividends are taxed is based on the return's taxable income.
The marginal percentage for both ordinary income and capital gains references the marginal bracket at which an additional $1,000 of Ordinary Income or Capital Gains will be taxed. If you ever forget, you can click on the question mark icon next to the rate (or anywhere else within Holistiplan) to see a more detailed explanation. 