The rate used to calculate the tax due on the next dollar of income is referred to as the:

Understand the Problem

The question is asking about the specific term used to describe the tax rate applied to the next dollar of income earned, specifically focusing on different types of tax rates.

More Information

The marginal tax rate applies to the highest dollar of your income, meaning it's the percentage you pay on the last dollar earned, not your entire income.

Tips

A common mistake is confusing the marginal tax rate with the average tax rate, which is the total tax paid divided by total income.

Sources

• Marginal Tax Rate - taxfoundation.org
• Marginal Tax Rate: What It Is and How To Determine It - investopedia.com