Marginal Tax Rate
TaxesThe tax rate applied to the last dollar of income earned — the rate on your highest tax bracket.
Example
Example: Your taxable income is $55,000 (single filer). Your marginal rate is 22% — the bracket your last dollar falls into. But your effective rate is only about 13%. Getting a $5,000 raise pushes you to $60,000 — still in the 22% bracket. You pay $1,100 in additional tax on the $5,000 raise, keeping $3,900. A raise never costs you money; only the new dollars are taxed at the higher rate.