# Marginal Tax Rate

*Taxes — Finicade finance glossary*

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.

**Also known as:** marginal rate, top rate

**Related terms:** [Effective Tax Rate](https://finicade.com/glossary/effective-tax-rate), [Tax Bracket](https://finicade.com/glossary/tax-bracket), [Tax Deduction](https://finicade.com/glossary/tax-deduction), [Laffer Curve](https://finicade.com/glossary/laffer-curve), [Taxable Income](https://finicade.com/glossary/taxable-income)

Source: https://finicade.com/glossary/marginal-tax-rate