How an additional $1,000 in income can cost you $6,420 more in premiums in CA

[LiberalFighter]

85. Starrout and dsc are right

In your scenario the 20% tax rate does not exist. Instead, you will have income that is taxed at 0%, 10%, 15%, and 25%. None of it will be taxed all at the same rate.

For 2013, the standard deduction is $6,100 for single person and $12,200 for a couple. Exemptions are $3,900 per person.

A single person would have a total of $10,000 that is exempt from taxes. For a person to have their first dollar of income taxed at the 25% it would require $46,251 of wages. The tax on that first dollar which is the dollar after $46,250 would be 25 cents or 25% of the first dollar. But none of the $46,250 in wages would be taxed at 25%.


If you were correct in all of the AGI being taxed at 25% the tax would be $9062.75. Instead, it is $4991.50. The first $10,000 is not taxed. The next $8,925 is taxed at 10% for $892.50 and the $27325 is taxed at 15% for $4098.75. And the the final $1 at 25% for 25 cents.

The effective rate as applied correctly for $46,251 in wages would be 10.79%. While your application it would be 19.59%.

The above doesn't take into consideration if the person has itemized deductions which would reduce tax liabilities.

A married person or head of household have higher levels of income before the same rates apply.