Marginal Tax Rate

Your marginal tax rate, which includes federal, state, and local income taxes, self-employment taxes, and federal payroll — is the percentage that will come off the top of your next dollar of incremental taxable income. Put another way, if your marginal tax rate is 25%, you get to keep 75 cents on the next dollar of income that your earn.

Here is a good visual Marginal Tax Rate Calculator (for 2007). It is important to note that your marginal tax rate is not the same as your effective tax rate (or average tax rate). For example, a single person with no independent who earned $50,000 in 2007 has a marginal tax rate of 25%, but his effective tax rate is only 13.47%.