Staying Out of the 25% Tax Bracket

With two full-time teaching salaries, we were on the borderline of the 15% and 25% tax brackets for many years. The biggest jump in tax brackets is between 15% and 25%. To avoid the 25% tax bracket, we contributed to retirement through a 403b plan (public sector 401k), or an IRA.  I always hated paying a 25% rate, because it means for each additional dollar I earned, I only got to keep about 61 cents, since I also had to pay 7.65% in Social Security and Medicare, as well as 6% to our state retirement plan.  If we contributed an additional 10% to charity, that only left about 51 cents on the dollar. Continue reading Staying Out of the 25% Tax Bracket