The tax rate that specifically applies to each new dollar of income is the:

Question

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The marginal tax rate specifically applies to each new dollar of income earned. It is important to understand because it helps individuals and companies determine the tax consequences of taking on additional income or making changes to their financial situation. The average tax rate, on the other hand, is the total tax liability divided by total income and represents the overall tax burden. Short-term and long-term capital gains tax rates apply specifically to gains from the sale of assets held for less than and more than one year, respectively, and are not relevant to all sources of income.

The Tax Rate That Specifically Applies to Each New Dollar