Marginal tax refers to the progressive tax regime in which various income is taxed at a certain percentage that is raised in percentage. This serves to provide equity, the more one earns, the higher the percentage the individual pays on the increment. Marginal tax systems enable governments to finance government services without having to overwork the low-income earners. The marginal tax increases when you pass through some income levels termed as tax brackets. The percentages of each bracket are different. Tax is only imposed on the income in a bracket at the rate of that bracket. All the income is not subjected to the top tax, which is a widespread misconception.

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