Marginal rate and effective rate answer two different questions, and mixing them up is how a normal paycheck starts to look like a tax disaster. Marginal rate asks what rate applies to your last dollar. Effective rate asks what share of your whole pay went in tax in total. Only the second one tells you how much you actually kept.
The calculator reports both rates for federal tax, so you can see the gap on your own salary instead of guessing from a bracket table.
Definitions that stay separate
Marginal tax rate is the rate that applies to the next dollar of taxable income, which is the rate in the highest bracket you reach. Effective tax rate is total tax divided by a base, and the base matters: effective federal rate on gross pay is different from effective rate on taxable income, because the standard deduction sits between those two bases. In this guide, effective rate means total federal tax divided by gross pay, unless stated otherwise, because that is the figure a reader can compare with take-home pay.
Three salaries, same idea, different gap
All three examples are single filers in 2026, with no pre-tax deductions, using the $16,100 standard deduction and the single brackets from IRS Revenue Procedure 2025-32.
| Salary | Taxable income | Federal tax | Marginal rate | Effective rate on gross |
|---|---|---|---|---|
| $50,000 | $33,900 | $3,820 | 12% | 7.6% |
| $75,000 | $58,900 | $7,670 | 22% | 10.2% |
| $120,000 | $103,900 | $17,570 | 22% | 14.6% |
The $75,000 example is worked out in the bracket guide: $1,240 at 10 percent, $4,560 at 12 percent, and $1,870 at 22 percent, for $7,670 total. The $120,000 example reaches the same 22 percent marginal bracket as the $75,000 example on most of its upper slice, but its effective rate is higher, because a larger share of its income sits in the 22 percent slice, and a small slice above $105,700 is not yet in this table because taxable income is $103,900, just below that threshold.
Why a raise into a higher bracket cannot lower your net pay
A common fear is that earning a little more and crossing into a higher bracket will leave you with less after tax. In a graduated system that cannot happen from the bracket change alone, because only the slice above the threshold is taxed at the higher rate. The slice below the threshold keeps its lower rates. A raise can change other things, such as benefit eligibility, credit phaseouts, or additional Medicare tax at a separate threshold, but the bracket itself does not tax your whole salary at the new rate.
That is also why marginal rate is useful for a decision at the margin, such as whether an extra $1,000 of income, or an extra $1,000 of pre-tax deduction, is worth it, while effective rate is useful for a comparison of overall burden, such as comparing two states or two years.
Where readers go wrong with these two numbers
First, using the marginal rate as if it were the rate on gross pay overstates tax, sometimes by a factor of two. Second, using the effective rate on taxable income as if it were the rate on gross pay understates the deduction effect in the opposite direction. Third, comparing a marginal rate in one state with an effective rate in another mixes two different measures and produces a misleading ranking. Keep the base consistent: marginal to marginal, effective on gross to effective on gross, and state to state on the same base.
FAQs
Which rate should I use to estimate a raise?
Use the marginal rate for the extra income, because only the new slice is taxed at that rate, while your existing income keeps its existing bracket treatment.
Which rate tells me how much tax I paid overall?
Use the effective rate, total tax divided by gross pay, for an overall burden comparison.
Can my effective rate ever be higher than my marginal rate?
For federal income tax in a graduated system, no, the effective rate on taxable income cannot exceed the marginal rate, because lower slices pull the average down. Other taxes and phaseouts can change a combined figure, which is a different calculation.