2002 Marginal Tax Brackets

Your marginal tax bracket determines how much of the earnings from savings and investments you get to keep after taxes. Below are the four individual tax rate schedules for 2002:

**Individual Tax Rate Schedules for 2002**
	Taxable Income ($)	Effective Rate (%)
Married Filing Jointly	0 to 12,000	10
	12,001 to 46,700	15
	46,701 to 112,850	27
	112,851 to 171,950	30
Head of Household	0 to 10,000	10
	10,001 to 37,450	15
	37,451 to 96,700	27
	96,701 to 156,600	30
Single	0 to 6,000	10
	6,001 to 27,950	15
	27,951 to 67,700	27
	67,701 to 141,250	30
Married Filing Separately	0 to 6,000	10
	6,001 to 23,350	15
	23,351 to 56,425	27
	56,426 to 85,975	30
Higher 35% and 38.6% marginal tax brackets are also in effect for higher income taxpayers with incomes above the upper limit of the 30% rate.

Tax-Exempt and Taxable Yields Compared*
Tax-Exempt Yield (%)	Taxable Equivalent Yield (%) for Tax Rate of:
Tax-Exempt Yield (%)	15% Tax Bracket	27% Tax Bracket	30% Tax Bracket
2.0	2.35	2.74	2.86
2.5	2.94	3.43	3.57
3.0	3.53	4.10	4.29
3.5	4.18	4.79	5.00
4.0	4.71	5.48	5.71
4.5	5.29	6.16	6.43
5.0	5.88	6.85	7.14
5.5	6.47	7.53	7.86
6.0	7.06	8.22	8.57
6.5	7.65	8.90	9.29
7.0	8.24	9.59	10.00
7.5	8.82	10.27	10.71
8.0	9.41	10.96	11.43
*Federal income tax rates only. Does not include state income tax.

If you cannot find a specific rate on the chart you can compare yields by using the following formula:

Taxable equivalent yield = tax-free yield ÷ (100% - marginal tax bracket %)

Example: Assume you are in the 27% tax bracket, and have an account with a 4.5% tax-free yield. To get the equivalent taxable yield, divide 4.5% by 73% (100% - 27%). The taxable yield is 6.16%.

Once you know how to calculate tax equivalent yields, it's time to go shopping and compare rates of return offered on various investment products. Next, determine which will pay a higher after-tax rate.

Generally speaking, people in the 10% and 15% tax brackets earn more after taxes with taxable saving and investment products. Those in higher tax brackets, usually do better with tax-exempts.