What is a marginal tax rate?

Marginal tax rate (tax bracket)

A marginal tax rate is the rate charged on the top slice of income, the bracket that slice falls in. Income is taxed in layers, so not every dollar pays that rate. Extra income, like a 401(k) (definition, opens in a new tab) withdrawal, lands on top, so it's taxed at the marginal rate or higher.

Where does this site use it?

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Related terms

• Withholding (W-4)
• Early withdrawal penalty

General education, not financial advice.