Why is the marginal tax rate higher than my overall tax rate?
Where to find it: TIME MACHINE results → Detailed Cash Flow → Taxes
The marginal rate estimates the extra tax on an additional amount of income. The overall or average rate relates total tax to total income. They answer different questions.
MRA estimates the marginal rate by recalculating the applicable tax with a small additional amount of income, generally $100, and comparing the tax difference. Bracket boundaries and income-dependent calculations can make that local rate different from the average across all income.
Use the detailed tax table for the same person and year when comparing rates. A high marginal rate does not mean all of the person’s income was taxed at that rate.