marginal tax rate

The rate at which income over a certain amount is taxed. Although in general, graduated income taxes impose higher tax rates on higher incomes, the tax rate does not rise for each additional dollar earned. Rather, it rises by income brackets, and each tax rate applies only to income that falls in that bracket. For example, in 2002, the highest marginal federal tax rate was 38.5 percent, which for single taxpayers was imposed on income in excess of $54,000.

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The debate over a few points here or there in the top marginal tax rate has been a foundational partisan dispute of 21st-century American politics.

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That includes higher standard deductions, a lower top marginal tax rate, bigger child tax credits, lower estate taxes and certain deductions tailored for small businesses.

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Each bracket has a base tax amount in addition to a marginal tax rate.

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The base tax amount for this income bracket is $340, which should be added to marginal tax rate.

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The final step of the income tax calculation involves applying the marginal tax rate and base amount according to the appropriate bracket.

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marginal sea marginal utility

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