Tax bracket
Also called: marginal tax rate, progressive tax
A tax bracket is a range of income taxed at one rate. Under a progressive system each rate applies only to the income inside its bracket, so moving into a higher bracket never lowers your take-home pay.
Your marginal rate is the rate on your next dollar; your effective rate is total tax divided by total income, and is always lower under a progressive system.
Related terms
- Standard deduction: The standard deduction is a fixed amount of income that isn't taxed at all.
- Capital gains tax: Capital gains tax is tax on the profit from selling an investment for more than you paid.
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