Marginal Tax Rate - ENGAGE CPAs

The marginal tax rate is the tax rate you pay on an additional dollar of income. The federal marginal tax rate for an individual increases as income rises. Not every dollar of income that you earn is taxed the same, depending on if you're married or single and the amount of your total income, your first $10,000 of income might only be taxed at 10%, but the last $10,000 of income might be taxed at 32%.
Your marginal tax rate is the highest bracket that you pay taxes in. Using the example below, if you and your spouse earn $100,000 of income, combined, your Marginal Tax Rate is 22%. After your income hits $80,250, the remaining $19,750 is taxed at 22%. And that percentage is very important to know because that means that every dollar of income between $80,250 and $171,050 is taxed at 22%. Income over $171,051 is taxed at 24%.
So if you're wondering whether or not to purchase that iMac before the end of the year to save on taxes, or if you're contemplating putting money into your traditional IRA, know that you only save 22 cents on the dollar. Your tax savings are not what you spend dollar for dollar.