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Marginal Federal Tax Rates

2018 – 02/05 Tax rates get a closer look. The Congressional Budget Office just published a report entitled “Marginal Federal Tax Rates on Labor Income: 1962 to 2028.” The marginal tax rate is defined as “the percentage of an additional dollar of earnings that is unavailable to an individual because it is paid in [federal income and payroll] taxes.” As the rates rise, the amount of compensation a worker retains is reduced, and that may reduce the incentive to work more. Some people drop out of the labor force for the same reason. Here’s the full report: https://bit.ly/2SpVwGe 

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