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This site is not affiliated with the IRS or any state revenue department. Information is for general educational purposes only and is not tax, legal, or financial advice. State tax brackets and rules change annually. Always confirm current figures with your state's Department of Revenue or a licensed CPA before filing. Sources: state revenue departments, Tax Foundation, IRS Publication 17. Last reviewed April 2026.
Income Tax by State›Marginal vs Effective Rate
Updated April 2026

Marginal vs Effective Tax Rate: The Confusion That Costs People Thousands

Your marginal rate is the rate applied to your last dollar of income. Your effective rate is what you actually pay as a percentage of your total income. They are very different numbers, and confusing them leads to bad decisions. A California earner at $100,000 has a 9.3% marginal rate but only a 5.8% effective rate.

Marginal Rate

The rate applied to the last dollar you earn. The highest bracket you fall into.

Example: You earn $100,000 in California. Your top bracket is 9.3% (applies to income above $70,606). Your marginal rate is 9.3%. Only the dollars above $70,606 are taxed at 9.3%.

Effective Rate

Total tax paid divided by total income. This is what you actually pay on average across all your income.

Example: That same $100,000 California earner pays $5,843 in state income tax. Divide $5,843 by $100,000: effective rate is 5.8%. Not 9.3%.

Worked Example 1: California Single Filer, $100,000

Starting from $100,000 gross income, applying California standard deduction ($5,202), taxable income is $94,798. Here is how each bracket is applied:

BracketIncome in BracketRateTax
$0 - $10,756$10,7561.0%$108
$10,756 - $25,499$14,7432.0%$295
$25,499 - $40,245$14,7464.0%$590
$40,245 - $55,866$15,6216.0%$937
$55,866 - $70,606$14,7408.0%$1,179
$70,606 - $94,798$24,1929.3%$2,250
Total$94,798 taxable5.8% effective$5,359

Marginal rate: 9.3%. Effective rate: ~5.8%. The 9.3% applies only to income above $70,606. That is $24,192 out of $100,000 gross income.

Worked Example 2: Pennsylvania Single, $75,000

Pennsylvania has a flat 3.07% rate with no standard deduction. The effective rate equals the marginal rate (minus the personal exemption effect).

Gross income: $75,000

Deduction: $0 (no standard deduction)

Taxable income: $75,000

$75,000 x 3.07% = $2,303

Effective rate = 3.07%

In a flat-tax state, the effective rate very nearly equals the flat rate. The only difference is any personal exemptions or credits.

Common Misconception: Will a Raise Cost Me Money?

Absolutely not. In any progressive tax system, only the additional income is taxed at the higher rate. Moving into a higher bracket never causes your after-tax income to decrease.

The math (California example):

At $70,000 income: state tax ~$2,750, take-home ~$67,250

At $71,000 income (in 9.3% bracket): state tax ~$2,843, take-home ~$68,157

The raise of $1,000 added $907 to take-home. Always positive.

Interactive: Calculate Your Effective Rate

Top Rate (marginal)

13.3%

Effective Rate

5.8%

Approximate Tax

$5,800

Approximate estimates using interpolated effective rates. Use the per-state calculators for precise figures with bracket-by-bracket calculation.

Frequently Asked Questions

What is the difference between marginal and effective tax rate?
Your marginal tax rate is the rate applied to your last dollar of income, the highest bracket you fall into. Your effective tax rate is total tax paid divided by total income. The effective rate is always lower than the marginal rate in a graduated tax system because only the income within each bracket is taxed at that bracket's rate.
How do I calculate my effective state income tax rate?
To calculate your effective state income tax rate: (1) Calculate your taxable income (gross income minus standard deduction or itemized deductions). (2) Apply each bracket's rate only to the income within that bracket. (3) Add up the tax from all brackets. (4) Divide by your gross income (not taxable income). This gives your effective rate as a percentage of gross income.
Will a pay raise push me into a higher tax bracket and cost me money?
No. This is one of the most common tax misconceptions. In a graduated tax system, only the dollars above a bracket threshold are taxed at the higher rate. If you earn $70,000 and get a $5,000 raise to $75,000, only the additional $5,000 is taxed at the new rate. Your total tax bill goes up, but your take-home pay after taxes also goes up. You will always be better off earning more income.
Is the effective rate the same as the average rate?
Yes, effective tax rate and average tax rate mean the same thing: total tax paid divided by total income. Some sources use 'average rate' more precisely to mean total tax divided by taxable income, while 'effective rate' means total tax divided by gross income. The distinction is small but worth knowing when comparing figures across sources.
Does California really have a 13.3% income tax rate?
California does have a 13.3% top marginal rate, but it only applies to income above $1,000,000 for single filers. A Californian earning $100,000 pays an effective state income tax rate of about 5.8%. At $75,000, the effective rate is about 4.0%. The 13.3% rate applies to a very small number of extremely high earners.
California (10-bracket example) →All graduated-rate states →Flat tax states (marginal = effective) →All 50 states →Federal effective rate calculator →