The marginal tax rate is what you pay on your highest dollar of taxable income. The U.S. progressive marginal tax method means one pays more tax as income grows.

The effective tax rate is the percent of income or pre-tax profits that an individual or a corporation pays in taxes.

What Are Marginal Tax Rates? Marginal tax rates are the percentage of tax applied to each extra dollar of income as a taxpayer moves through different tax brackets. In other words, it represents the ...