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What Is a Marginal Tax Rate? Definition and Calculator
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do not influence our editors’ opinions or ratingsWhat Is a Marginal Tax Rate? Definition and Calculator
The tax rate you pay on the highest portion of your taxable income is known as your marginal tax rate. Here’s how to determine it.
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Content Management Specialist
2 years of experience Expertise Personal income taxes Investing basics Investment fundsBella Avila is a content management specialist on the investing and taxes team at NerdWallet. Previously, she was a copy editing intern at NerdWallet through the Dow Jones News Fund internship program. Bella graduated from The University of Oklahoma with a bachelor's degree in journalism. She lives in Minneapolis, Minnesota.
Bella Avila is a content management specialist on the investing and taxes team at NerdWallet. Previously, she was a copy editing intern at NerdWallet through the Dow Jones News Fund internship program. Bella graduated from The University of Oklahoma with a bachelor's degree in journalism. She lives in Minneapolis, Minnesota. Content Management Specialist + more + more
Editor & Content Strategist
Expertise Taxes InvestingSabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York.
Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York. Published in Editor & Content Strategist + more + moreOne of the most common misconceptions about the federal tax system is that someone's entire income is taxed at a single rate. In reality, most people pay at least a few different tax rates on different portions of their income.
One of the most common misconceptions about the federal tax system is that someone's entire income is taxed at a single rate. In reality, most people pay at least a few different tax rates on different portions of their income.In tax speak, a marginal tax rate refers simply to someone's highest tax rate.
In tax speak, a marginal tax rate refers simply to someone's highest tax rate.Marginal tax rate definition
Marginal tax rate definitionA marginal tax rate is the rate paid on the last dollar of taxable income. It equates to your highest tax bracket.
A marginal tax rate is the rate paid on the last dollar of taxable income. It equates to your highest tax bracket.Although you may hear someone say that they are "in the 22% tax bracket," what that really means is that 22% is the highest rate applied to their income, not that their entire income is taxed at that rate.
Although you may hear someone say that they are "in the 22% tax bracket," what that really means is that 22% is the highest rate applied to their income, not that their entire income is taxed at that rate.Marginal tax rate example
Marginal tax rate exampleSay you’re a single taxpayer who made $60,000 in taxable income in 2025. In this scenario, parts of your income fall into three different tax brackets: 10%, 12% and 22%.
Say you’re a single taxpayer who made $60,000 in taxable income in 2025. In this scenario, parts of your income fall into three different tax brackets: 10%, 12% and 22%.
How to calculate your marginal tax rate
How to calculate your marginal tax rateFiguring out your marginal tax rate is often fairly simple. Once you know how much taxable income you have, you'll just need to review the tax brackets for the current tax year. Keep in mind that filing status does come into play, as there are different tax brackets and rates for each filing status.
Figuring out your marginal tax rate is often fairly simple. Once you know how much taxable income you have, you'll just need to review the tax brackets for the current tax year. Keep in mind that filing status does come into play, as there are different tax brackets and rates for each filing status.For example, single taxpayers who made up to $103,350 in 2025 would see a highest tax rate of 22%. Those married filing jointly, however, could have made up to $206,700 and would still fall within that 22% marginal rate.
For example, single taxpayers who made up to $103,350 in 2025 would see a highest tax rate of 22%. Those married filing jointly, however, could have made up to $206,700 and would still fall within that 22% marginal rate.» MORE: See this year's tax brackets and rates
» MORE: » MORE: See this year's tax brackets and ratesMarginal vs. effective tax rate
Marginal vs. effective tax rateWhile 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.
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.
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 .What is a flat tax?
What is a flat tax?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.
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.» Learn more: State income tax rates
» Learn more: » Learn more: State income tax ratesHow to reduce your marginal tax rate
How to reduce your marginal tax rateReducing your marginal tax rates means reducing your taxable income — and there are many strategies you can use to do so. Keep in mind that some methods require itemizing on your return, which isn’t right for everyone.
Reducing your marginal tax rates means reducing your taxable income — and there are many strategies you can use to do so. Keep in mind that some methods require itemizing on your return, which isn’t right for everyone.Some popular ways to reduce your marginal tax rate include:
Some popular ways to reduce your marginal tax rate include:Contributing to a 401(k) or traditional IRA.
Contributing to a 401(k) or traditional IRA.Making charitable contributions.
Making charitable contributions .Contributing to an HSA or FSA.
Contributing to an HSA or FSA.Deducting qualified medical expenses.
Deducting qualified medical expenses .» Learn more: 12 ways to lower your tax bill
» Learn more: » Learn more: 12 ways to lower your tax bill About the author Bella Avila Bella Avila Bella Avila is a content management specialist on the investing and taxes team at NerdWallet. See full bio.Helpful resources
Helpful resources How Federal Tax Brackets and Rates Work Capital Gains Tax: Long and Short-Term Rates for 2025-2026 How to Fill Out Your W-4 Form and When to Adjust It More like this Taxes 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem