AGI Bracket Shift Planner

Find AGI moves that drop you into a lower tax bracket: HSA, 401k, IRA, FSA, business expense — model dollar-for-dollar bracket impact. Methodology and assumptions documented below; sources cited.

Marginal vs Effective Rate

Your marginal rate is the rate paid on the next dollar of income. Your effective rate is total tax divided by total income (lower because lower brackets fill first). Tax planning works on marginal — reducing AGI saves at marginal rate. A 24% bracket taxpayer reducing AGI by $10,000 saves $2,400 federal (plus state).

Tools to Reduce AGI

Pre-tax: 401k ($23,500 limit 2026, $31,000 if 50+), HSA ($4,400 self / $8,750 family 2026), traditional IRA ($7,000), FSA medical ($3,200), dependent-care FSA ($5,000). Above-line: student loan interest ($2,500 max), educator expense ($300), self-employed health insurance, self-employed retirement (SEP-IRA up to $69,000). Bunched itemized: charitable donations to DAF in one year vs spread.

When to Skip Bracket Optimization

If you are in the lowest bracket already, Roth (post-tax) contributions beat traditional (pre-tax). If you expect dramatically higher income in retirement (rare), traditional 401k may pay more in retirement than saved today. For most middle and upper-middle earners, max traditional 401k + HSA before considering anything else.

Last updated May 2026. Sources: IRS Pub 17, IRS Tax Brackets.