Federal income tax is progressive: each dollar is only taxed at the rate for that slice of income. Being in the 22% bracket doesn't mean paying 22% on everything — see why your effective rate is always lower than your marginal rate.
Your marginal rate is the tax rate on your next dollar of income. If you're in the 22% bracket, earning one more dollar costs you 22¢ in federal taxes.
Use it for decisions like: “How much more will I take home from a raise?” or “How much does a Traditional 401k contribution save me this year?”
Your effective rate is your total tax bill divided by your gross income. It reflects what you actually pay on average — and it's always lower than your marginal rate.
Use it to understand your overall tax burden, compare year-over-year, or plan your budget around the total tax owed.
A common fear: “If I earn one more dollar and move into the 22% bracket, all my income gets taxed at 22%.” This is false.
Only the dollars within each bracket are taxed at that bracket's rate. Lower brackets fill first. Moving up a bracket never reduces your take-home pay.