Marginal Tax Rate: Definition, Examples

What is a marginal tax rate?

Due to the progressive tax system in the U.S., your income typically isn’t taxed at a single rate. Instead, parts of your taxable earnings can fall into different brackets, with each chunk being taxed at a different rate. Most people fall into a few tax brackets, not just one.

A marginal tax rate refers to the tax rate paid on the last dollar of taxable income. It equates to the rate associated with your highest tax bracket.

Simple tax filing with a $50 flat fee for every scenario

With NerdWallet Taxes powered by Column Tax, registered NerdWallet members pay one fee, regardless of your tax situation. Plus, you’ll get free support from tax experts. Sign up for access today.

for a NerdWallet account

Transparent pricing

Hassle-free tax filing* is $50 for all tax situations — no hidden costs or fees.

Maximum refund guaranteed

Get every dollar you deserve* when you file with this tax product, powered by Column Tax.

Faster filing

File up to 2x faster than traditional options.* Get your refund, and get on with your life.

*guaranteed by Column Tax

Cartoon illustration of a person sitting at a desk with a laptop, calculator, and paperwork, surrounded by tax-related icons and graphics.

Marginal tax rate example

Say you’re a single taxpayer who makes $60,000 in taxable income in 2024. In this scenario, parts of your income fall into three different tax brackets: 10%, 12% and 22%. Only the amount over $47,150 would be taxed at 22% — making this your highest tax rate, or marginal tax rate.

Single filer 2024 marginal tax rates

Filing status also comes into play when determining your marginal tax rate. That’s because there are different tax brackets and rates for each filing status.

For example, single taxpayers can make up to $100,525 and see a highest tax rate of 22%. Those married filing jointly, however, can make up to $201,050 and still fall within that 22% marginal rate.

Marginal tax rate calculator

Fill in the fields below to determine your marginal tax rate for the 2023 or 2024 tax year.

Marginal vs. effective tax rate

While marginal tax rate refers to your highest tax bracket, effective tax rate is the actual percentage of your income that is taxed. This is sometimes referred to as your average tax rate.

You can determine your effective tax rate by dividing your total taxes owed (line 24 of your Form 1040) by your taxable income (line 15). You can also figure your effective tax rate using our tax calculator.

A flat tax is when all the income you earn is taxed at the same percentage. Whether you make $100 or $1 million in taxable income during the year, each dollar is taxed the same. This differs from the federal progressive tax model but is sometimes seen in the U.S. in state-level income tax.