41 CFR 302-17.40: -17.40 CMTR calculation methodology.

(a) The CMTR is a key element that greatly enhances the accuracy of the calculation of the RITA. Agencies use the information the employee provides on their tax filing status and taxable income to determine the CMTR.

(b) The CMTR is, in essence, a combination of the employee's Federal, State, and local tax rates. However, the CMTR cannot be calculated by merely adding the Federal, State, and local marginal tax rates together because of the deductibility of State and local income taxes from income on the employee's Federal income tax return. The formula prescribed in paragraph (c) of this section for calculating the CMTR, therefore, is designed to adjust the state and local tax rates to compensate for their deductibility from income for Federal tax purposes. Examples of how to calculate the CMTR are published in an FTR bulletin available at https://gsa.gov/ftrbulletins.

(c) The formula for calculating the CMTR is:

Equation 1 to Paragraph (c)

CMTR = F + (1 − F)S + (1 − F)L

Where:

F = Federal marginal tax rate.

S = State marginal tax rate, if any.

L = Local marginal tax rate, if any.

(d) Agencies find the Federal marginal tax rate by comparing the taxable income, as shown in the tax information the employee provides, to the Federal tax tables in the current year's Form 1040-ES instructions.

(e) Agencies find the State and local marginal tax rates that apply to the employee (if any) by comparing the taxable income to the most current state and/or local tax tables provided by the States and localities.

(f) The procedures for calculating the CMTR are the same for the one-year and two-year RITA processes.