Marginal tax rate

Your marginal tax rate is the rate charged on the next unit of income you earn, not on all of your income. Because it applies only to the top slice, it is usually higher than your effective rate.

It matters when you weigh overtime, a raise or freelance work, since only the extra amount is taxed at that rate. A common mistake is assuming a higher band taxes all of your income; in most systems only the amount above the threshold is affected, and thresholds depend on where you live.