Marginal Tax Rate
Also called: marginal rate, top rate
Your marginal tax rate is the rate applied to your next dollar of income, and it's the only rate relevant to a decision. It determines what a deduction is worth, whether a traditional or Roth contribution wins, and how much of a bonus you keep. The true marginal rate is often higher than the bracket suggests once payroll tax, state tax and phase-outs are stacked on top.