What is the difference between a Marginal Tax Rate and an Effective Tax rate? Who cares? You might if you add a second job and see some of your tax benefits disappear. Here is what you need to know. The tax code is filled with terms we rarely use in everyday conversation. Two of the more common are Marginal Tax Rates and Effective Tax Rates. Knowing what they mean can help you think differently about your potential tax obligation. Definition Marginal Tax Rate: This is the tax rate applied to the “next” dollar you earn. Since our income tax rates

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