Next video:
Loading the player...

The marginal tax rate is based on a progressive tax system, where tax rates for an individual will increase as income rises. This method of taxation aims to fairly tax individuals based upon their earnings, with low income earners being taxed at a lower rate than higher income earners.

Tax Rate

Single Filer Income


Up to $8,925


$8,926 to $36,250


$36,251 to $87,850


$87,851 to $183,250


$183,251 to $398,350


$398,351 to $400,000


$400,001 or more


Under the United States’ progressive tax system, taxpayers are divided into different tax brackets based on their taxable income, from a low of 10% for those earning less than $8,925, to a high of 39.6% for those earning over $400,001, according to 2014 tax rates.

If Mary has $87,000 of taxable income in 2014, her marginal tax rate will be 25%, according to her tax bracket.  If she were to earn an additional $851 of taxable income, she would pass into the next bracket, and her marginal tax rate would increase to 28%.

Say it is close to the end of the tax year and Mary knows she will receive a $10,000 bonus.  This bonus will increase her marginal tax rate to 28%.  As a result, she will want to search for deductions to reduce her taxable income and increase her pre-tax contributions. Better yet, she could find a way to postpone the bonus until the first business day of the next year.

For the most up to date Tax Rates, visit the IRS or Your Local Tax Authority. 

Related Articles
  1. Taxes

    Breaking Down Taxes For Different Income Brackets

    Here is a useful rundown of how much you will pay in taxes based on your income.
  2. Taxes

    How Getting A Raise Affects Your Taxes

    Many people think they may actually make less overall because they are paying more taxes.
  3. Taxes

    Which Countries Have the Highest Taxes on High Incomes?

    These countries charge the highest taxes on high incomes.
  4. Taxes

    Comparing Long-Term vs. Short-Term Capital Gains Tax Rates

    Learn about the difference between short- and long-term capital gains and how the duration of your investment can impact your tax liability.
  5. Taxes

    The History Of Taxes In The U.S.

    The number of taxes that we now consider a given did not always exist. Find out how they arose.
  6. Taxes

    Comparing Regressive, Proportional and Progressive Taxes

    Learn about the basic differences between three common tax systems.
  7. Financial Advisor

    What Clinton's Presidency Would Mean for Advisors, Retirement

    If Hillary Clinton is elected to the presidency, her tax plans could have a big impact on economic growth and retirement security.
  8. Taxes

    Minimizing the Amount of Income Tax You Owe

    The amount of income you receive and tax deductions and credits you take impact how much you'll owe.
  9. Taxes

    Taxes: Who Pays And How Much?

    When it comes to taxes, the debate is endless on who pays what, especially in Congress. With no new initiatives in sight, let's take a look at who is paying now.
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center