Marginal Tax Rate
The tax rate applied to your last (highest) dollar of income — the rate on additional earnings.
What does marginal tax rate mean?
In a progressive system, income is taxed in brackets, so only the portion above each threshold is taxed at the higher rate. Your marginal rate matters for decisions at the margin, like a raise or a deduction.
Related terms
Marginal Tax Rate — frequently asked
What is the difference between marginal and effective tax rate?
Your marginal rate is the rate on your last dollar earned — your top bracket. Your effective rate is total tax divided by total income, which is lower because earlier dollars are taxed in lower brackets.
Will a raise into a higher bracket lower my take-home pay?
No. Only the income above each threshold is taxed at the higher rate, not your whole income. A raise always increases take-home pay; you simply keep a bit less of the portion that lands in the new bracket.