Greetings!,

Do you know how much you pay in federal income tax? Do you know your tax bracket?

I don't know of anyone who enjoys paying taxes. Yet, it seems something that is so hated is often so misunderstood. Many people fail to realize that our form of taxation is graduated. Your tax bracket is not the amount you pay on all your income, it is the tax rate you pay on your last dollars of income after deductions and adjustments.

For example, if you look at the tax bracket illustrated here, a couple married and filing jointly with $100,000 of taxable income would be in the 22% tax bracket. However, the 22% tax is on the amount of taxable income over $96,950. Their taxable income from $23,850 to $96,950 is taxed at 12% and below $23,850 at 10%. Therefore, if we add the taxes per income bracket together, the effective tax rate is 11.8% or $11,828.

The above is taxable income, so this does not include the standardized deduction for a married couple of $30,000 or other deductions like contributions to qualified plans that they may have.

So why are we talking about taxes in early November? There are a couple reasons:

1) This is a good time to review your tax planning strategy for 2025. This could include adding more to retirement plans for a tax deduction, increasing contributions to a Health Savings Account (HSA).

2) This is also a good time review accounts with options for tax loss harvesting (selling negative investments for 30 days or longer to use losses to offset gains).

Another tax consideration comes from J.P. Morgan. With 2026 quickly approaching, many Americans are looking forward to unusually large income tax refunds. Next year, J.P. Morgan expects a double-digit percentage increase in

average personal income tax refunds due to the backdating of tax cuts from the OBBBA to the start of 2025. The new tax breaks didn’t become law until early July, and even then, tax withholding schedules were not adjusted for this legislation. Therefore, significantly more money than usual has been withheld from taxpayers throughout the year. In 2025, Their estimate is that 63% of the 165 million filers will receive a

refund, with an average income tax refund of $3,200. In 2026, they expect 65% of filers to receive a refund, with an average refund of nearly $3,950.

You may remember in the past, when the government provided stimulus, much of this money was spent rather than saved. This could lead to growth of consumer based companies, but also trigger another round of inflation.

I have placed the full document below if you wish to read in ore detail.

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As always, thanks for reading.



Bernie & Chad