Tax Playbook · Big life moves
Know your marginal tax rate
Your marginal tax rate is the tax on your next dollar of pay, not the average across everything you earned. That average — your effective rate — is always lower. So if you earn a $5,000 bonus and your marginal rate is 32%, the IRS takes $1,600 of the bonus and you keep $3,400. Check the next-dollar rate before you say yes to extra work, extra pay, or a tax deduction.
Good for: For everyone — this is the one tax number worth knowing before any money decision.
Learn the basics
Recent articles & guides
- Kitces — Marginal vs effective tax rates: when to use each
- Finance Mastering — Marginal vs effective: what you actually pay
- Motley Fool — What is a marginal tax rate?
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Educational summary, not tax advice. Limits and rules change — confirm current law with your tax adviser.