85,000 taxable in the US
- Taxable income
- $85,000.00
- Total tax paid
- $13,614.00
- Your top slab or bracket rate
- 22%
Effective rate16.02%
13,614 / 85,000 = 16.016%, taking the tax from the federal calculator case
Open this exampleTaxincome tax
Marginal vs Effective Tax Rate Calculator
The two rates that get confused with each other. The marginal rate decides what a raise is worth; the effective rate is what the year actually cost. Under any progressive schedule the second is always lower.
Also called: what is my effective tax rate, marginal tax rate calculator.
Effective rate
6.84%
You paid 6.84% of your income in tax while your top rate is 15%. The gap of 8.16% points is what a progressive schedule does, and the reason a bracket is a bad summary of a tax bill.
Marginal rate
15%
Gap between the two
8.16%
Tax on the next 1,000 you earn
$150.00
Kept from the next 1,000
$850.00
Computed from the published rates for the tax year you selected, which is not necessarily the current year. A calculation, not tax advice, and it does not know anything about your circumstances beyond the figures entered.
Method and background
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
A progressive system taxes each band of income at its own rate, so the top rate touches only the last slice. Divide total tax by total income and the result is an average across all the bands, which is the effective rate. Use the marginal rate to decide whether extra income or an extra deduction is worth it, and the effective rate to understand the bill.
effective = total tax / taxable income; marginal = the rate on the top band- total tax
- Everything actually paid (currency)
- income
- Taxable income (currency)
- r_top
- The rate on the highest band reached (decimal)
Worked examples
Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.
Written about this
- A raise cannot leave you worse off · 1 min · Crossing into a higher tax bracket taxes the next dollar more, not every dollar. On a $1,000 raise at the 22% to 24% boundary you keep $762.
Method and limits
What it assumes
- Both figures are for the same period and the same definition of income.
What it deliberately does not model
- Region-agnostic on purpose: it works from figures you already have rather than from a rate table, so it is correct in any market and for any year.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- Which rate should I use to decide about a deduction?
- The marginal one. A deduction removes income from the top of the pile, so it saves tax at your top rate, not at your average rate.
- Can the two ever be equal?
- Only under a flat tax with no exempt band. Any tax-free threshold at all pulls the effective rate below the marginal rate.