Tax Rates: Marginal and Effective

There are two types of Tax Rates related to your tax return: the "Marginal Tax Rate" and the "Effective Tax Rate"

  • Marginal Tax Rate
    The marginal tax rate (aka Marginal Tax Bracket) is the federal income tax rate that will be applied to any additional income that you might receive. For example, if your marginal tax rate is 28%, the next $100 of additional income that you earn will result in $28 of additional tax.
  • Effective Tax Rate
    The effective tax rate is the actual percentage of your total income that you pay in federal income tax.