Marginal Tax Rate Calculator
Calculate your marginal tax rate and see how additional income affects your tax bracket. Compare federal and state marginal rates for informed financial decisions.
Current Tax Bracket
Additional Income Impact
Bracket Analysis
Understanding Marginal Tax Rates
Your marginal tax rate is the tax rate applied to your next dollar of income. It's the highest tax rate you pay and determines which tax bracket you're in. Understanding marginal rates helps with financial planning and tax optimization.
How Marginal Tax Rates Work
The U.S. tax system is progressive, meaning higher income levels are taxed at higher rates. However, only the income within each bracket is taxed at that bracket's rate. Your marginal rate is the rate that applies to additional income.
Progressive Taxation Example
Single filer with $75,000 taxable income:
$11,600 × 10% = $1,160
$35,550 × 12% = $4,266
$27,850 × 22% = $6,127
Total tax: $11,553 (15.4% effective rate)
Marginal rate: 22%
Federal Marginal Tax Brackets (2024)
| Tax Rate | Single Filers | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 - $11,600 | $0 - $23,200 | $0 - $16,550 |
| 12% | $11,601 - $47,150 | $23,201 - $94,300 | $16,551 - $63,100 |
| 22% | $47,151 - $100,525 | $94,301 - $201,050 | $63,101 - $100,500 |
| 24% | $100,526 - $191,950 | $201,051 - $383,900 | $100,501 - $191,950 |
| 32% | $191,951 - $243,725 | $383,901 - $487,450 | $191,951 - $243,700 |
| 35% | $243,726 - $609,350 | $487,451 - $731,200 | $243,701 - $609,350 |
| 37% | $609,351+ | $731,201+ | $609,351+ |
State Marginal Tax Rates
High Tax States
- California: 1% to 13.3%
- New York: 4% to 10.9% + NYC
- New Jersey: 1.4% to 10.75%
- Connecticut: 2% to 6.99%
- Minnesota: 5.35% to 9.85%
No Income Tax States
- Texas: 0% state income tax
- Florida: 0% state income tax
- Nevada: 0% state income tax
- Washington: 0% state income tax
- Wyoming: 0% state income tax
Marginal vs. Effective Tax Rates
When Marginal Rates Matter
- Evaluating job offers or bonuses
- Deciding on additional work
- Planning retirement withdrawals
- Considering investment options
- Tax planning and optimization
When Effective Rates Matter
- Understanding total tax burden
- Comparing tax systems
- Long-term financial planning
- Budgeting and cash flow
- Overall tax efficiency
Tax Planning with Marginal Rates
Bracket Management
Time income to avoid higher brackets
Use tax-advantaged accounts
Consider retirement contributions
Income Shifting
Defer bonuses to next year
Accelerate deductions
Harvest tax losses
Tax Credits
Maximize available credits
Child and education credits
Business expense deductions
Common Marginal Rate Mistakes
Overestimating Tax Impact
Thinking all income is taxed at marginal rate
- Marginal rate applies only to additional income
- Progressive system protects lower income
- Effective rate is always lower
- Deductions and credits reduce taxable income
Ignoring State Taxes
Focusing only on federal marginal rates
- State taxes add to total marginal rate
- Some states have flat taxes
- Local taxes may apply
- Consider tax-friendly states
Key Takeaways
- Marginal tax rate is the tax rate on your next dollar of income
- It's the highest tax rate you pay and determines your tax bracket
- Only additional income is taxed at your marginal rate
- Effective tax rate (total tax/total income) is always lower than marginal rate
- Federal marginal rates range from 10% to 37% for 2024
- State taxes can significantly increase your combined marginal rate
- Use marginal rates for decision-making about additional income
- Tax planning can help optimize your marginal tax rate
- Consult a tax professional for personalized tax planning advice