Glossary term
Marginal tax rate
A marginal tax rate is the estimated tax rate applied to the next dollar of a stated income type.
Plain meaning
What marginal tax rate means
Marginal rate is about the next dollar, not the whole income amount. It is different from an average tax rate, which compares total tax to an income base.
Calculator context
Why income type matters
Salary, interest, capital gains, eligible dividends, and non-eligible dividends can have different marginal tax effects because taxable income, inclusions, gross-ups, credits, and provincial or territorial rules can differ.