If we think about the average based on all of her income, it would be 9.8%. For the $50,000 of taxable income, her tax rate is 12.6%. For Sarah, we can think about her average tax rate in two ways. Average tax rate: This is the same as the effective tax rate.Effective tax rate: The total tax paid as a percentage of total income taxed.Marginal tax rate: The rate at which the last dollar of income is taxed.Income tax brackets: The ranges of income to which a tax rate applies (currently there are seven as shown above).
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