An individual's average tax rate will always be lower than their marginal tax rate due to the graduated scale of personal tax rates.

Question

Quizplus · Accepted Answer

This is because the marginal tax rate applies only to the income that falls within that specific tax bracket, while the average tax rate is calculated by dividing the total tax paid by the total income earned, taking into account all tax brackets. As a result, the higher marginal tax rate does not apply to the individual's entire income, and hence the average tax rate is always lower than the marginal tax rate.

An Individual's Average Tax Rate Will Always Be Lower Than