The short version: two rates, two different questions
Your marginal tax rate is the rate on your next dollar of income. Your effective tax rate is your total tax divided by your income. The first tells you what extra income costs. The second tells you what share of your income goes to tax overall.
The two numbers are almost never the same. Under the US federal system, the effective rate is lower than the marginal rate for nearly everyone who owes tax. That gap comes from how progressive brackets work.
Marginal rate: the rate on your last and next dollar
Your marginal rate is the bracket your top dollar of taxable income falls in. For 2026, federal brackets run from 10% to 37%. Each rate applies only to the income inside its band.
| Rate | Single (2026 taxable income) | Married filing jointly |
|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Source: IRS Rev. Proc. 2025-32. Head of household and married filing separately tables are in our 2026 federal tax brackets guide.
The marginal rate matters most for decisions at the edge. Think of a raise, a side gig, a bonus or an extra retirement contribution. Each of those changes your income at the top, where the marginal rate applies.
Effective rate: the share of income that goes to tax
Your effective rate blends all your brackets into one average. You find it by dividing your total federal income tax by your income.
There is one choice to make: which income goes on the bottom of the fraction. Some people divide by taxable income. Others divide by total income before the standard deduction. The second version is usually lower and better reflects your whole paycheck. Either is fine, as long as you say which one you used.
The effective rate is useful for budgeting and for comparing years. It is less useful for deciding whether extra income is worth it.
Worked examples with 2026 figures
A single filer earning $75,000
This example shows the gap between the two rates in real numbers. It uses 2026 federal figures for a single filer who takes the standard deduction.
- Taxable income. $75,000 − $16,100 standard deduction = $58,900.
- 10% band. 10% × $12,400 = $1,240.
- 12% band. 12% × ($50,400 − $12,400) = 12% × $38,000 = $4,560.
- 22% band. 22% × ($58,900 − $50,400) = 22% × $8,500 = $1,870.
- Total tax. $1,240 + $4,560 + $1,870 = $7,670.
Now compare the rates:
- Marginal rate: 22%, because the last dollar of taxable income sits in the 22% band.
- Effective rate on taxable income: $7,670 ÷ $58,900 = 13.02%.
- Effective rate on total income: $7,670 ÷ $75,000 = 10.23%.
If this person earns $1,000 more, federal income tax rises by 22% × $1,000 = $220. Tax becomes $7,890. The effective rate on total income edges up to $7,890 ÷ $76,000 = 10.38%. Nothing about the first $75,000 is taxed any differently.
A married couple filing jointly
Joint filers have wider bands, so the same pattern shows up at higher incomes. Take a couple with $182,200 of income and the $32,200 joint standard deduction.
- Taxable income: $182,200 − $32,200 = $150,000
- Tax through the 12% band: $11,600 (the IRS running total at $100,800)
- 22% × ($150,000 − $100,800) = 22% × $49,200 = $10,824
- Total tax: $11,600 + $10,824 = $22,424
The marginal rate is 22%. The effective rate is $22,424 ÷ $150,000 = 14.95% of taxable income, or $22,424 ÷ $182,200 = 12.31% of total income.
A single filer with the same $150,000 of taxable income would land in the 24% bracket, since the single 22% band ends at $105,700. Filing status changes both rates, even at the same income.
Using each rate for real decisions
Use the marginal rate to judge a change, and the effective rate to judge the whole year. Mixing them up leads to wrong answers in both directions.
Pretax retirement contributions
A pretax 401(k) or traditional IRA contribution lowers taxable income at the top. For the $75,000 single filer above, an extra $3,000 contribution would cut federal income tax by about 22% × $3,000 = $660. Using the 10.23% effective rate instead would suggest a saving of only about $307, which understates the benefit.
Taking on extra work
A freelance side job adds income at your marginal rate, plus self-employment tax. For a single filer in the 22% bracket, each extra $1,000 of profit adds $220 of income tax before self-employment tax. Our self-employment tax guide shows how that second tax is figured.
Comparing years or households
The effective rate is the better yardstick when you want to compare. It is also the number to use when you set aside a share of income for taxes, since it reflects the whole year. It shows how much of your income went to federal income tax in a given year, after all brackets and deductions. Two people in the same bracket can have very different effective rates, depending on how far into the bracket they are.
The effective rate across a range of incomes
As income rises, the effective rate climbs slowly toward the marginal rate but never reaches it. The figures below use 2026 single brackets and taxable income, built from the IRS running totals.
| Taxable income (single) | Total tax | Marginal rate | Effective rate |
|---|---|---|---|
| $50,400 | $5,800 | 12% | 11.51% |
| $105,700 | $17,966 | 22% | 17.00% |
| $201,775 | $41,024 | 24% | 20.33% |
| $640,600 | $192,979.25 | 35% | 30.12% |
Each row is the top of a band, so the marginal rate shown is the rate on the last dollar in that band. One dollar more would be taxed at the next rate up.
Notice the spread at the top. At $640,600 of taxable income, the marginal rate is 35%, but the effective rate is about 30.12%. The lower bands keep pulling the average down, even for very high earners. Joint filers see the same pattern at roughly twice these incomes through the 32% band.
Common mix-ups and what affects each rate
The most common myth is that moving into a higher bracket raises tax on all your income. It does not. Only the dollars above the bracket line pay the higher rate.
A second mix-up is reading the marginal rate as a bill. Someone in the 24% bracket does not hand over 24% of their pay in income tax. In the table above, a single filer at the top of the 24% band pays about 20.33% of taxable income, and less as a share of total income.
A third is assuming the effective rate is fixed. It moves every time income, deductions or credits change. Several factors push the two rates apart:
- Deductions lower taxable income. A deduction saves money at roughly your marginal rate, as long as it does not push you into a lower band.
- Credits reduce tax dollar for dollar. They lower your effective rate but do not change your marginal bracket.
- Capital gains and qualified dividends have their own 0%, 15% and 20% rates. They can make your effective rate quite different from your bracket. See our capital gains guide.
- Payroll taxes are separate. Social Security (6.2%) and Medicare (1.45%) come out of wages on top of income tax. Phase-outs of credits and deductions can also make your true marginal cost higher than your bracket.
All figures here are federal income tax only. State and local income taxes are not included, and they add their own marginal and effective rates. For the official rate tables, see the IRS page on 2026 inflation adjustments.
Run your own numbers with the Tax Bracket Calculator, which shows both your marginal and effective rate.