Your marginal tax rate is the rate on your last dollar of taxable income — in other words, your top bracket. Your effective tax rate is your total tax divided by your total income — the blended average across every bracket. Because the US taxes your early dollars at lower rates, the effective rate is always lower than the marginal rate. Confusing the two leads to bad decisions like turning down a raise. Figures below are simplified 2026 estimates (source: IRS), not tax advice.
What is a marginal tax rate?
The marginal rate answers: “If I earn one more dollar, what rate does it get taxed at?” In the 2026 federal brackets, that depends on where your last dollar lands:
- A single filer with $58,900 of taxable income sits in the 22% bracket, so their marginal rate is 22%.
- Earn one more dollar and it is taxed at 22% — but nothing already earned is re-taxed.
The marginal rate is the right number for decisions at the margin: should I contribute more to a pre-tax 401(k)? How much of my bonus will I keep?
What is an effective tax rate?
The effective rate answers: “Across everything I earned, what share went to tax?” It is simply:
Effective rate = total tax ÷ total income
Because your first dollars were taxed at 10% and 12% before any income reached your top bracket, the average is pulled well below your marginal rate.
A worked 2026 example
Take a single filer with a $100,000 salary. After the 2026 standard deduction of $16,100, taxable income is $83,900. Federal tax is built bracket by bracket:
| Bracket | Rate | Income taxed here | Tax |
|---|---|---|---|
| 10% band | 10% | $12,400 | $1,240 |
| 12% band | 12% | $38,000 | $4,560 |
| 22% band | 22% | $33,500 | $7,370 |
| Total federal income tax | — | $83,900 | $13,170 |
- Marginal federal rate: 22% (the top bracket reached)
- Effective federal rate (on gross): $13,170 ÷ $100,000 = about 13.2%
So this person is “in the 22% bracket” but pays an effective federal rate of only ~13%. The gap between 22% and 13% is the whole point of a progressive system.
Marginal vs effective at a glance
| Concept | Marginal rate | Effective rate |
|---|---|---|
| Definition | Rate on your last/next dollar | Total tax ÷ total income |
| Equals | Your top bracket | A blended average |
| Use it for | Raises, bonuses, 401(k) decisions | Budgeting, overall tax burden |
| Relative size | Higher | Lower |
| In the $100k example | 22% | ~13.2% (federal only) |
What about FICA and state tax?
The example above is federal income tax only. Your overall effective rate is higher once you add FICA and state income tax:
- That same $100,000 single filer in Texas (no state tax) has an estimated overall effective rate near 20.8% — $13,170 federal + $7,650 FICA + $0 state on $100,000.
- In California, the overall effective rate rises to about 26.0%, because state income tax adds roughly $5,223.
This is the number our take-home pay calculator reports, and it’s what determines your actual net pay. Compare overall effective rates across states on the take-home pay by state page.
Why this matters: the “raise pushed me into a higher bracket” myth
A common worry is that a raise will lower take-home pay by bumping you into a higher bracket. That essentially never happens with a salary increase. Only the portion of the raise that lands in the higher bracket is taxed at the higher rate; everything below stays put. Your effective rate rises only slightly, and your take-home pay still goes up.
Sources and disclaimer
Not tax advice. All figures are simplified 2026 estimates and exclude credits, itemized deductions, and pre-tax contributions. Verify with the IRS. See our methodology and disclaimer.