Marginal tax rate.
In plain English
The US uses a progressive tax system, which means different chunks of your income are taxed at different rates. Your marginal tax rate is the rate that applies to the very next dollar you earn: the top of your income. Most of your income is actually taxed at lower rates than your marginal rate.
How much of a raise do you actually keep?
01Why it matters
This is the #1 most misunderstood thing about taxes. People think 'if I earn one more dollar, my whole income gets taxed at the higher rate.' That's not how it works. A raise that pushes you into the next bracket only taxes the dollars above the cutoff at the higher rate. You always take home more after a raise.
02The math, step by step
In 2026, a single filer with $65,000 of taxable income owes 10% on the first $12,400, 12% on the next slice up to $50,400, and 22% on whatever's above that up to $65,000. Their marginal rate is 22%, but their effective tax rate (total tax divided by total income) is closer to 14%. If they get a raise to $70,000, only the new $5,000 is taxed at 22%, not the whole $70,000.
03What this is NOT
Marginal rate = rate on the next dollar. Effective rate = average rate across all your income. The effective rate is always lower than the marginal rate because lower brackets fill up first.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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