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Marginal Tax Rate

Your marginal tax rate is the rate of the tax bracket that your highest dollar of income falls into. It is often confused with the rate you pay on all your income, but it only applies to income above the bracket threshold. When people say "I'm in the 22% bracket," they mean their marginal rate is 22% — not that they pay 22% on everything.

Example

A single filer earning $75,000 is in the 22% bracket (which covers $48,476–$103,350). Their marginal rate is 22%, but their effective rate is only 15.22%.

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Income Tax Brackets

The U.S. federal income tax uses seven progressive brackets with rates from 10% to 37%. Each bracket rate only applies to the income within that range — not to your entire income.