Marginal Tax Rate
Your marginal tax rate is the rate you pay on the last dollar of income earned — the rate of the highest tax bracket you fall into. It is not the rate applied to your entire income.
In a progressive tax system, income is taxed in slices. The first slice (up to a threshold) is taxed at a low rate; each higher slice is taxed at a higher rate. Your marginal rate is just the rate on the top slice.
A single US filer earning $80,000 in 2025 has a marginal rate of 22% — but they don't pay 22% on all $80,000. They pay 10% on the first $11,925, 12% on the next slice, and 22% only on income above $48,475.
Knowing your marginal rate matters for decisions like whether to contribute to a Roth IRA (paying tax now) or a traditional 401k (deferring tax).
Put this into practice with our free calculator:
Open calculator →Related terms
- Effective Tax Rate
- Your effective tax rate is your total tax paid divided by your total income, expressed as a percentage. It is always lower than your marginal rate in a progressive tax system.
- Tax Bracket
- A tax bracket is a range of income taxed at a specific rate in a progressive tax system. Each bracket rate applies only to the income within that range, not to your entire income.
- Standard Deduction
- The standard deduction is a fixed amount the IRS lets US taxpayers subtract from gross income before calculating tax, without itemising individual deductions. For 2025: $15,000 (single) or $30,000 (married filing jointly).