Money calculates your tax rate using the effective income tax rate for your state. For the current year, Money applies the effective income tax rate to the amount shown next to Annual income on the Taxes & inflation page.
For every other year in your Lifetime Plan, Money applies the (assumed) effective income tax rate based on your income for that year. So, when major life events (such as retirement or a big promotion) cause your income to change, the Money effective tax rate will reflect the new income for that year. If you move, Money will take this into account as well.
For special income you add to your Lifetime Plan, such as an inheritance or the sale of a house or business, you can have Money automatically calculate the tax rate or you can enter a custom tax rate.