2003 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 2003:

Individual Tax Rate Schedules for 2003 (Revised May 6, 2003)
Filing Status	Taxable Income ($)	Effective Rate (%)
Married Filing Jointly	0 to 14,000	10
	14,001 to 56,800	15
	56,801 to 114,650	25
	114,651 to 174,700	28
	174,701 to 311,950	33
	311,951 and higher	35
Head of Household	0 to 10,000	10
	10,001 to 38,050	15
	38,051 to 98,250	25
	98,251 to 159,100	28
	159,101 to 311,950	33
	311,951 and higher	35
Single	0 to 7,000	10
	7,001 to 28,400	15
	28,401 to 68,800	25
	68,801 to 143,500	28
	143,501 to 311,950	33
	311,951 and higher	35
Married Filing Separately	0 to 7,000	10
	7,001 to 28,400	15
	28,401 to 57,325	25
	57,326 to 87,350	28
	87,351 to 155,975	33
	155,976 and higher	35

Tax-Exempt and Taxable Yields Compared*
Tax-Exempt Yield (%)	Taxable Equivalent Yield (%) for Tax Rate of:
Tax-Exempt Yield (%)	15% Tax Bracket	25% Tax Bracket	28% Tax Bracket	33% Tax Bracket	35% Tax Bracket
2.0	2.35	2.66	2.77	2.98	3.08
2.5	2.94	3.33	3.47	3.73	3.85
3.0	3.53	4.00	4.17	4.48	4.62
3.5	4.18	4.66	4.86	5.22	5.38
4.0	4.71	5.33	5.55	5.97	6.15
4.5	5.29	6.00	6.25	6.71	6.92
5.0	5.88	6.66	6.94	7.46	7.69
5.5	6.47	7.33	7.63	8.20	8.46
6.0	7.06	8.00	8.33	8.95	9.23
6.5	7.65	8.66	9.02	9.70	10.00
7.0	8.24	9.33	9.72	10.44	10.77
*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 25% tax bracket, and have an account with a 4.5% tax-free yield. To get the equivalent taxable yield, divide 4.5% by 75% (100% - 25%). The taxable yield is 6.%.

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.