If an individual is taxed at a 17 percent rate for each extra dollar earned,the reference is to the

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The marginal tax rate refers to the tax rate paid on an additional dollar of income earned. In this scenario, the individual is being taxed at a 17 percent rate for each additional dollar earned, indicating their marginal tax rate. The nominal tax rate refers to the stated tax rate in the tax code, while the average tax rate refers to the total tax paid divided by total income earned. The effective tax rate is the actual tax paid divided by taxable income.

If an Individual Is Taxed at a 17 Percent Rate