Do Tax Write-Offs Help Lower Your Tax Bracket?

Write-offs cut your taxes when you file an itemized tax return.
i Duncan Smith/Photodisc/Getty Images

The simplest way to move into a lower tax bracket is to earn less money. If that strategy doesn’t appeal to you, you certainly can use tax write-offs to help lower your tax bracket. You don’t have to be wealthy to use tax-write-offs. There are quite a few ways to take money off of your taxable income when you file your taxes. Every dollar you deduct brings your income closer to the threshold of the next lower tax bracket.

Tax Brackets

The first dollars you make each year are taxed by the federal government at a low percentage rate. That percentage rate increases as your taxable income increases in a series of steps called tax brackets. As of 2012 there were six tax brackets, starting with 10 percent. If your taxable income goes above a certain amount, the additional income is taxed at 15 percent. As your income continues to increase, the added money is taxed at 25 percent, 28 percent, 33 percent and finally 35 percent. The threshold amounts vary from year to year and depend on your filing status. For example, in 2012 the 10-percent tax bracket for a single person was zero to $8,700, and the 15-percent bracket was $8,700 to $35,350. If you filed a joint return, the same tax brackets were zero to $17,400 and $17,400 to $70,700. Your highest tax bracket is called your marginal tax rate.


Not all of your income is subject to federal income tax. If you don’t file an itemized return, you get to subtract a personal exemption and a standard deduction, and possibly several personal deductions from your gross income to figure your taxable income. When you choose to file an itemized return, you get the personal exemption, but not the standard deduction; however, you can subtract expenses the Internal Revenue Service considers an allowable deduction. Those deductions are called tax write-offs.

Lowering Your Tax Bracket

A tax write-off helps lower your tax bracket because the amount you subtract comes off of the top, so to speak. That is, each tax deduction reduces the amount of money that is taxed at your marginal tax rate. For example, suppose you and your spouse earn $80,000 after subtracting personal exemptions. With no tax write-offs, the excess of $9,300 over $70,700 will be taxed at a marginal rate of 25 percent. However, if you have tax write-offs of $10,000, your taxable income is reduced to $70,000. That lowers your marginal tax rate, or tax bracket, to 15 percent.

Examples of Write-Offs

You could call finding tax deductions to write off the great American pastime during tax season. There are a lot of them, and some of them are easy to miss. A good rule is to keep receipts for everything and question a tax preparer if you have any doubt about whether a particular expense is deductible. A few common deductions, or write-offs, you may be able to take include: interest on student loans; your state and local sales tax; your state and local income tax; contributions to a a variety of retirement plans, including 401(k)s and traditional IRAs; donations of cash or property to qualified charities; out-of-pocket expenses you incur when you do charitable work; business expenses your employer does not reimburse you for. Some surprising tax write-offs include expenses incurred for a Seeing Eye dog or other service animal.

the nest