Marginal Tax Rate Calculator
A marginal tax rate calculator helps determine the tax rate applied to your last dollar of income. It's essential for financial planning, understanding tax brackets, and calculating actual tax liability in progressive tax systems where different portions of income are taxed at different rates.
Marginal Tax Rate: %
Total Tax Owed: $
What is a marginal tax rate?
The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify. In progressive tax systems, income is taxed in tiers where each tier's rate applies only to income within that bracket range.
How does marginal tax rate differ from effective tax rate?
While marginal rate refers to the highest tax bracket your income reaches, effective tax rate is the average rate you pay on all taxable income. Effective rate is calculated by dividing total tax paid by total income.
Why is my marginal tax rate important?
Knowing your marginal tax rate helps in making financial decisions like evaluating additional income opportunities, retirement contributions, or investment choices. It shows the tax impact of earning more money.
Do tax brackets adjust for inflation?
In many countries including the US, tax brackets are adjusted annually for inflation. These adjustments prevent "bracket creep" where cost-of-living increases push taxpayers into higher brackets without real income gain.
How often do tax brackets change?
Tax brackets typically change annually with inflation adjustments. Major structural changes usually occur through new tax legislation, which happens less frequently depending on government policy decisions.