Federal income tax laws that cause individuals’ marginal and statutory tax rates to differ

• Presents 20 phaseouts of 2013 individual tax breaks in a table as a teaching tool.
• Phaseouts increase individual taxpayers’ marginal tax rate above their tax bracket.
• Table includes how each phaseout works, its AGI range, and its formula to compute MTR.
• Article contains 16 illustrations for use in class, as homework, and exam questions.
• Phaseouts table is updated annually and is available upon request: geisler@umsl.edu.

This article presents a “phaseouts table” as a tax educational tool. The table compiles and summarizes the phaseouts of and limitations on deductions, credits, exclusions from income, and allowed contributions for individual U.S. federal income taxpayers in 2013. Phaseouts can cause individual taxpayers’ marginal tax rate (MTR) to be higher than their statutory tax rate (STR) (i.e., “bracket” based on taxable income). For each phaseout, the table includes how the phaseout works, the adjusted gross income (AGI) range for the phaseout, and the related formula to compute MTR, given STR. The table is appropriate for any course that covers either U.S. federal income taxation of individuals or tax planning. (The phaseouts table is updated annually and is available upon request from the author.) The remainder of the article is a teaching resource, explaining how to compute the specific impact on MTR of each of several example phaseouts. Together, the phaseouts table and article enable U.S. tax instructors to assist students in learning about phaseouts in an integrated, comprehensive manner.