Rental Property Depreciation Cash Flow

[Cameron Belknap]

I am trying to calculate the cash flow "tax savings" due to depreciation for a property I am under contract for, and plan to rent out.

Everywhere I read, I am told to use effective tax rate (total taxes you pay/total income), but that does not make sense to me.  The taxes I pay on every extra dollar I make are not taxed at this effective tax rate, they are taxed on a "next dollar tax rate".  This is what my depreciation expense will be biting into correct?

For example, I make mid 60s, my effective tax rate is around 23%, but my next dollar tax rate is much higher at 37% (22%+Fica+state).  Shouldn't I use this number, and not my effective tax rate when calculating depreciation cash flow?

Lets assume that my depreciation will not bump me down to a different Federal income tax bracket.

Let me know what you think!

Cameron