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For financial planning purposes, it's important to know your marginal tax rate. Otherwise, you can't estimate how much of your raise or bonus you'll have left after Uncle Sam takes his cut or how to figure the after-tax cost of contributing more to your tax-deferred retirement plan.

Your marginal tax rate — including federal, state, and local income taxes and federal payroll and self-employment taxes — is the percentage that will come off the top of your next dollar of incremental taxable income. Put another way, the percentage of that next dollar of income that you'll actually be allowed to keep is 100% minus your marginal tax rate.

Unfortunately when you earn a healthy income, the federal component of your marginal rate is almost guaranteed to be higher than advertised because of so-called phase-out rules that reduce or eliminate various tax breaks. For example, your child tax credit begins to be phased out (reduced) when your adjusted gross income (AGI) tops $110,000 if you're a married joint filer. If you are affected by this rule, you probably think you're in the 28% bracket. But your real marginal rate is higher than the stated percentage, because your credit gradually evaporates as you move up the income ladder.

In estimating your marginal rate for 2012, our calculator takes this phase-out rule and several others into account. So don't be shocked if the rate that pops out of this calculator is quite a bit higher than you expected. (It's a dirty little secret the politicians would prefer to keep under wraps.)

Warning: If you are married and filing a separate return or subject to the alternative minimum tax, this calculator won't work for you.

Marginal Rate Calculator