You should know how the marginal rate works when planning your tax filings.
The highest tax rate you’ll pay on your income is called the marginal tax rate. The United States has a progressive tax system, which means that different tiers of income are taxed at varying rates.
You should know how the marginal rate works when planning your tax filings. This can be especially important if you receive bonuses from work or have other streams of income.
Marginal Tax Rate Depends on Last Dollar of Income
When people discuss what tax bracket they are in, they usually give a flat number. They may say they’re in the 22 percent tax bracket. But that isn’t entirely true. You may fall into the 22 percent tax bracket, but your total income isn’t taxed at 22 percent.
