Definition
The rate applied to your last dollar of income under the progressive U.S. system. Moving into a higher bracket only taxes the income inside that bracket, never your whole paycheck.
Why it matters
The whole-paycheck myth makes people fear raises, decline overtime, and misunderstand deductions. Marginal thinking, knowing only the last dollars face the new rate, fixes all three.
Example
A raise pushes a worker $2,000 into the 22% bracket. Only that $2,000 is taxed at 22%; everything below it keeps its old rates. The raise is always worth taking.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.