What is average and marginal tax rate?

What is the difference bewteen average tax rate and marginal tax rate?

• Answer:

  Average is the total amount of tax divided by the total amount of income...it therefore includes all deductions and tax brackets, usually lower % ones, getting to the total as part of it...average. The marginal, is on the NEXT $ of income. So it basically is going to be closer (or exactly) the highest tax rate you pay, being applicable to the last bracket your in, and generally having already used up all dedcutions available, and in fact, maybe losing some because some dedcutions drop off above certain incomes. Clear as mud? Marginal rate...the amount of tax pid on the NEXT $ of income...average rate includes the lower brackets and he tax, or no tax, on the first amounts of income.