Marginal tax rates apply to the last dollar of your income within a specific tax bracket. As your income increases, you might move into higher tax brackets, leading to a higher marginal tax rate for those additional earnings. It’s important to note that the marginal tax rate isn’t applied to your entire income, only the portion within that bracket. An understanding of marginal tax rates will help you reduce lifetime taxes and understand when pre-tax and post-tax investments are more efficient.