Marginal vs Effective Tax Rate
Marginal = rate on your next dollar. Effective = total tax divided by total income. The common error: assuming the whole salary is taxed at the marginal rate.
Definition
US federal brackets are marginal — only income within each bracket is taxed at that rate. At $80k single (2024): total federal tax ~$12,500; effective rate ~15.6%; marginal rate 22%. People often overestimate their tax burden because they confuse the two.
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