Incremental Tax
Definition of 'Incremental Tax'A tax that increases in increments based on income levels. Incremental taxes must be considered when evaluating new investment opportunities, especially for individuals or companies in the upper end of their current tax brackets. |
|
Investopedia explains 'Incremental Tax'Incremental taxes may turn a seemingly profitable investment into a bad decision. For example, let's say an investor earns just below the maximum earnings allowable in his or her current tax bracket. A new investment opportunity is offered, which promises to earn a significant return. The investor must weigh the additional revenues against the incremental taxes associated with moving into the higher tax bracket. He or she may find that paying the higher tax rate on all or part of his or her income does not warrant investing in the profitable project. |
Related Definitions
Articles Of Interest
-
Tax-Saving Tips For Canadian Taxpayers
Find out how to get a bigger return. -
Tax Tips For The Individual Investor
We give you seven guidelines to help you keep more of your money in your pocket. -
How To Cut Your Alternative Minimum Tax
Save yourself money by lowering the amount of tax you owe. -
How does the marginal tax rate system work?
The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax rate increases, the taxpayer ends up with less money per dollar earned ... -
Canadians: Smart Ways To Use Your Tax Refund
Taxes are an annoying annual chore akin to going to the dentist. Luckily, however, some of us get a nice tax refund after the process. It's important to use this refund wisely though, and Canadians ... -
Has Income Tax Become A Class Tax On The Poor?
With more than 33% of American families falling close to the poverty line despite their adult members holding full-time employment, a rising number of citizens are being forced to pay a rate ... -
Possible Effects Of The Online Retail Tax
The U.S. Senate has passed a bill that will impose a sales tax on online retailers. Discover how the Marketplace Fairness Act could affect your bottom line. -
How To Get The Most Out Of Hiring An Accountant
When you hire an accountant, getting good tax advice going forward is as valuable as – or perhaps even more valuable than - getting the previous year’s taxes filed correctly. Learn what you need ... -
How The 2014 Obama Budget Could Affect Your Finances
Depending on which estimate you believe, Obama's proposed budget would raise the tax bill of a household with a yearly income of $50,000 to $75,000 between $63 and $100 per year. However, that’s ... -
Inaccurate Tax Return, Now What?
If the IRS finds errors, it will cost you. Find out how to fix them, and how to prevent them in the first place.
Free Annual Reports