Your effective tax rate is not the same as your marginal tax rate.
Let’s say you live in a country where your first $10,000 of income is taxed at 10%, your next $30,000 of income is taxed at 15%, and any income beyond that is taxed at 25%.
If you had $60,000 of taxable income you would owe $10,500 in tax.
That’s an effective tax rate of 17.5%.
But your marginal tax rate, which is the tax rate that would apply if you earned an additional dollar of income, would be 25%.
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