Marginal Tax Rates Calculator

Play around with the calculator to get a better idea of how marginal tax rates work. We cherry-picked a couple of years where taxes were a tad on the high side to demonstrate how taxation has changed over the last half century or so. Have fun.
Source: irs.gov | taxfoundation.org

Taxable Income:
Federal Tax:
Effective Tax Rate:

Although your last dollar earned is taxed at , you only pay federal income tax. This is the essence of marginal tax rates. Only the next dollar earned is taxed at the higher rate, not all income retroactively.

*Results are for demonstration purposes only. We round off cents to the nearest dollar for brevity.

Marginal Tax Rates!!! They're all the rage in Washington and on cable news. While they've been around basically forever, there seems to be much confusion over what they actually are, how they apply to normal people, and what it would mean if the top bracket was bumped to 70% on ultrahigh earners.

How do tax brackets really work?

We'll dig into the details below, but marginal tax rates generally work like this:

As your EARNED income increases, so does your tax bracket. However, as you advance up the bracket ladder you only pay the higher rates on the portion of income that falls within that bracket. Everyone pays the same rate on the money they earn within each bracket.

Table Definitions

Marginal Rate
This is the tax rate applied to the portion of income that falls within that bracket. Example ~ All single filers in 2018 pay $1,905 on the first $19,050 they earn. Leo DiCaprio pays the same tax on his first $19,050 as a high schooler mowing lawns.

Bracket Floor
Once your income hits this number, you'll pay the marginal rate on dollars earned above this rate up to the...

Bracket Max
The cutoff point that bumps you up into the next marginal bracket. Income over this amount is taxed at a higher rate than dollars earned below it.

Actual Tax
Based on the annual taxable income entered, this is the tax amount calculated within each marginal tax bracket. The sum of these figures is the total.

Effective Tax Rate
This is the percentage of taxable income you pay in federal income tax. It's a simple calculation.

  • tax paid / taxable income = effective tax rate