The tax rate paid on the last dollar of income that the taxpayer earns is the

Question

Quizplus · Accepted Answer

The marginal tax rate is the tax rate paid on the last dollar of income earned by the taxpayer. Therefore, option D is the correct answer. Option A, IRS discount rate, is not a tax rate. Option B, average tax rate, is the total tax paid divided by total income earned and is not specific to the last dollar earned. Option C, average marginal tax rate, is not a commonly used term and is not accurate in describing the tax rate paid on the last dollar of income.

The Tax Rate Paid on the Last Dollar of Income