Definition
The tax rate on your next dollar of income, which is the rate of the highest bracket your taxable income reaches.
What it means
Your marginal tax rate is the percentage of tax you pay on an extra dollar of income. It matters for decisions such as taking extra shifts, contributing to a traditional 401(k) or doing a Roth conversion, because those change income at the margin. Your average, or effective, tax rate is total tax divided by income and is usually much lower. The full marginal rate on wages can include federal income tax, Social Security and Medicare taxes and state and local income tax. Phase-outs of credits and deductions, such as the earned income tax credit or the senior deduction, can make the effective marginal rate higher than the bracket rate over certain income ranges. Pre-tax contributions save tax at roughly your marginal rate.
Example
A single filer with $70,000 of taxable income in 2026 is in the 22% bracket. A $1,000 raise adds about $220 of federal income tax plus $76.50 of Social Security and Medicare tax.
Illustrative numbers only. Your situation will differ.