Marginal Tax Rate
The marginal tax rate is the rate applied to the last dollar of income earned in a given tax year. In the US progressive tax system, only the income above each threshold is taxed at the bracket's rate — not all of your income.
2024 US Federal Marginal Rates (Single Filers)
| Marginal Rate | Income Range | |--------------|-------------| | 10% | $0 – $11,600 | | 12% | $11,601 – $47,150 | | 22% | $47,151 – $100,525 | | 24% | $100,526 – $191,950 | | 32% | $191,951 – $243,725 | | 35% | $243,726 – $609,350 | | 37% | Over $609,350 |
Marginal vs Effective Tax Rate
| Concept | Definition | Example ($80K income) | |---------|-----------|----------------------| | Marginal Rate | Rate on last dollar earned | 22% | | Effective Rate | Total tax ÷ gross income | ~11.8% |
The marginal rate is always at or above the effective rate because only the income above each bracket threshold is taxed at that rate.
Why It Matters
- Evaluating raises and bonuses: A $10,000 bonus in the 22% bracket costs ~$2,200 in federal income tax — not $220 (10%) because of the misconception that entering a bracket taxes all income.
- Retirement contributions: Every pre-tax 401(k) dollar reduces income at your marginal rate. At 22%, a $1,000 contribution saves $220 in taxes.
- Capital gains planning: Long-term capital gains are taxed at preferential rates (0%, 15%, 20%) regardless of your marginal income tax rate.
Related Tools
- Tax Bracket Calculator — Calculate your marginal rate, effective rate, and tax bill.
- Retirement Calculator — Model tax-advantaged contribution impacts.
→ Read the full guide: 2024 US Tax Brackets Explained