Marginal Tax Bracket

Marginal Tax Bracket means:
the tax rate on an additional dollar of income. Because of the progressive rate structure of income taxes, an additional dollar of income could be taxed at a higher rate than all previous income. The highest marginal tax bracket, for individuals with taxable incomes above $250,000, will be 39.6% in 1993 and thereafter. This is based on a tax rate of 36%, plus a 10% surcharge on income above $250,000. The $250,000 will be indexed after 1994.

Example of Marginal Tax Bracket:

Learn more about tax examples, explanations and calculations here.

Morris, a married taxpayer who files a joint return, earns $90,000, on which an $18,000 federal income tax payment is required. This tax represents an average rate of 20% ($18,000 of $90,000 = 20%). If Morris were to earn $1,000 more, the tax would increase by $330, because he is in the 33% marginal tax rate bracket.

See the entries Income Tax and State Income Tax in the American Encyclopedia of Law.

See Tax Rate and Tax Rate.