Computing State Average Marginal Income Tax Rate: An Application to Missouri
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Using filing-level data, we compute the average marginal income tax rate for the State of Missouri. We have data from 2000 through 2015. We start with a simple experiment: consider the effect that a $10 change in federal adjusted gross income would have on each filer’s tax payment. We find that with deductions, exemptions, and credits, the average marginal income tax rate has been remarkably steady over the years, ranging from 3.50 percent to 3.66 percent. This rate is much lower than the top marginal income tax rate, which has been 6 percent for taxable income greater than $9,000 for the entire sample period. In addition, we compute the average marginal income tax rate for different types of income in order to compare directly with the NBER’s reported state rate.