Marginal Tax Rate

The tax rate on your last dollar of income. Not the rate on all your income — that's a common misconception.

Full explanation

The US uses a progressive tax system with brackets. Your marginal rate is the rate applied to your next dollar of income. For example, if you're single with $50,000 taxable income in 2026, your marginal rate is 12% — but you don't pay 12% on all $50,000. You pay 10% on the first $12,400 and 12% on the next $37,600. Your effective rate (total tax / total income) is much lower than your marginal rate.

Source: IRS Publication 17 — Tax Computation

Ask the AI about this

“How does marginal tax rateaffect my taxes?”

Tax education only. Source: IRS Publication 17 — Tax Computation.