In short: Your marginal rate is the tax on your next dollar. Your effective rate is your total tax divided by your income. A single filer earning $100,000 in 2026 is in the 22% bracket and pays $13,170 of federal income tax, which is 13.17% of their income. Both numbers are correct. They answer different questions.
Two rates, two questions
The marginal rate answers: if I earn one more dollar, how much of it goes to tax? It is the rate of the highest bracket your income reaches.
The effective rate answers: what share of my income went to tax overall? It is total tax divided by income.
They are different because a progressive tax does not apply one rate to all of your income. It applies a rising series of rates to successive slices of it.
How the slices work
For a single filer in tax year 2026, the first $16,100 of income is covered by the standard deduction and is not taxed. The rest is taxable income, and it is taxed in bands:
| Taxable income band | Rate |
|---|---|
| $0 to $12,400 | 10% |
| $12,400 to $50,400 | 12% |
| $50,400 to $105,700 | 22% |
| $105,700 to $201,775 | 24% |
| $201,775 to $256,225 | 32% |
| $256,225 to $640,600 | 35% |
| Above $640,600 | 37% |
Each rate applies only to the income inside its own band. Reaching the 22% band does not change the tax on the income below it.
A full example
A single filer earns $100,000 and takes the standard deduction.
Taxable income is $100,000 minus $16,100, which is $83,900. That fills the first two bands and part of the third:
- The first $12,400 is taxed at 10%: $1,240.00
- The next $38,000, from $12,400 to $50,400, is taxed at 12%: $4,560.00
- The remaining $33,500, from $50,400 to $83,900, is taxed at 22%: $7,370.00
Total federal income tax is $13,170.00.
The marginal rate is 22%, because that is the rate on the last band reached. The effective rate is $13,170 divided by $100,000, or 13.17%. Measured against taxable income instead, it is 15.70%.
The myth this clears up
A common belief is that a pay rise which "pushes you into a higher bracket" can leave you worse off. Under a bracket system it cannot.
Take the boundary at $50,400 of taxable income. At exactly $50,400 the tax is $1,240 plus $4,560, or $5,800. Earn one more dollar and the tax is $5,800.22. The extra dollar was taxed at 22 cents. The $50,400 below it was taxed exactly as before.
The same holds at every threshold. Crossing into a higher band raises the tax only on the dollars above the line, so more income always means more income after federal income tax.
How the two rates move with income
Comparing three incomes for a single filer shows the pattern:
| Gross income | Federal income tax | Marginal rate | Effective rate on gross |
|---|---|---|---|
| $60,000 | $5,020.00 | 12% | 8.37% |
| $100,000 | $13,170.00 | 22% | 13.17% |
| $120,000 | $17,570.00 | 22% | 14.64% |
Between $100,000 and $120,000 the marginal rate does not move, because both incomes end in the 22% band. The effective rate still rises, because a larger share of the income now sits in that band. The effective rate climbs toward the marginal rate as income grows and never reaches it, since the lower bands are always part of the average.
Which rate to use for which decision
Use the marginal rate for decisions at the edge. The value of a deduction, the cost of a traditional retirement contribution versus a Roth one, the tax on a bonus or on overtime, the gain from tax-loss harvesting: each concerns the last dollars of income, so each is priced at the marginal rate. A $1,000 deduction saves a 22% filer $220, not $131.70.
Use the effective rate for the overall picture. Budgeting, comparing your tax burden year to year, or estimating what share of a salary is lost to tax are questions about the whole, and the effective rate answers them.
Using the wrong one misleads in both directions. Applying the marginal rate to all income overstates the bill: 22% of $100,000 is $22,000, which is $8,830 more than the real figure. Applying the effective rate to a deduction understates what the deduction is worth.
Where bracket arithmetic does stop working
The reassurance above applies to income tax brackets. Several other rules do create real cliffs, where one more dollar of income costs more than a dollar: income limits on certain credits and subsidies, the thresholds for Medicare premium surcharges, and benefit phase-outs. These are not brackets and do not behave like them. They are also why a household's true marginal rate can be higher than its bracket suggests.
This example also covers federal income tax alone. Payroll taxes and state income tax are separate and add to both rates.
Try it with your own numbers
The federal income tax calculator applies these bands to your income and filing status and shows the tax in each one. The paycheck calculator adds payroll taxes and withholding, and the capital gains tax calculator applies the separate schedule for long-term gains.
Sources
- Internal Revenue Service, Revenue Procedure 2025-32, the inflation-adjusted tax tables and standard deduction for tax year 2026. irs.gov/pub/irs-drop/rp-25-32.pdf
- Internal Revenue Service, Federal income tax rates and brackets. irs.gov/filing/federal-income-tax-rates-and-brackets