The average tax rate is the tax rate you pay when you include all wellsprings of assessable wage and separation that number into the measure of duties you owe. And after that you can find your average tax rate.
The marginal tax rate is the rate of expense connected to your wage for each duty section in which you qualify. Fundamentally, the marginal tax rate is the rate taken from your next dollar of assessable wage over a pre-characterized wage limit.
I like your response. I like how you broke down the average tax rate and the explanation of the marginal tax rate as well.
The average tax rate is the ratio between all taxable income and income, marginal tax rate refers to the tax rate applicable to the last taxable basis.There is a close relationship between the marginal tax rate and the average tax rate?In the case of a progressive tax system, the average tax rate increases with the increase of marginal tax rate, But the average tax rate is lower than the marginal tax rate. In the proportional tax system, the marginal tax rate is the average tax rate.
On every dollar, you pay tax which is also known as your Marginal tax. The Average tax is when you divide the total amount of your paid taxes by your total income. Which means your average percentage of your upcoming income you pay in taxes will almost be less than your marginal tax rate.