Explanation of Marginal Tax Rate
The marginal tax rate is the tax rate paid on your last dollar of taxable income. This typically equates to your highest tax bracket. For example, if you’re a single filer in 2023 with $35,000 of taxable income, you would be in the 12% tax bracket. If your taxable income went up by $1, you would pay 12% on that extra dollar, too.
Understanding Taxes for Purchases
If you buy an item for $1.08 and the tax rate is 7.5%, the tax on it is $0.08, and the before-tax price is $1.00.
Tax Calculation Tips
Use our income tax calculator to estimate how much you’ll owe in taxes. Enter your income and other filing details to find out your tax burden for the year.
Tax Rates for Different Income Brackets
- You pay no income tax on your first $9,275.
- The next bracket up to $37,650 is taxed at 15%.
- Then 25% up to $91,150, and so on up to 39.6%.
Understanding Tax-Free Threshold
If you earn $18,200 or less per year, you won’t have to pay tax on your income. This is known as the tax-free threshold. If you earn between $18,201 and $45,000, you will be taxed 19 cents for every dollar you earn over $18,200.
Tax Rates in California and Texas
- California: The state sales tax rate is 7.25%, with a base rate of 6% and an additional 1.25% that goes to local tax officials. Total tax rate can be as high as 10.25%.
- Texas: The state sales tax rate is 6.25%, and total rate can be as high as 8.25% depending on local jurisdictions.