what is the difference between a marginal tax rate and an effective tax rate 
a marginal tax rate is the amount of tax that applies to each additional income level as defined by the tax brackets in the u s taxpayers pay more in taxes as their income rises a taxpayer s effective tax rate is the single rate obtained by totaling the amounts owed as determined by the various applicable tax brackets and then dividing that by total income the bottom linea tax rate is a percentage at which the income of an individual or corporation is taxed the u s imposes a progressive tax where the higher the individual s income the greater percentage of tax is paid tax rates are also applied as sales tax on goods and services or as capital gains tax on investments some nations may impose a progressive tax while others may charge a flat tax rate or a regressive tax rate 