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CBO – The Distribution of Household Income and Federal Taxes

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Effective Marginal Tax Rates for Low- and Moderate-Income Workers, November 2012.

  • “The effective marginal tax rate is the percentage of an additional dollar of earnings that is unavailable to a worker because it is paid in taxes or offset by reductions in benefits from government programs. In part, such rates are determined by income and payroll tax rates and other features of the tax system, such as tax credits and deductions, that depend on earnings. However, effective marginal tax rates are also determined by programs providing cash and in-kind benefits, referred to as transfers, that target assistance to people of reduced means. When
    lawmakers target assistance to people of limited means, that assistance declines as income rises. Because increases in earnings for low- and moderate-income workers can cause relatively large reductions in such assistance, this analysis of effective marginal tax rates (hereafter referred to as marginal tax rates) focuses on those workers.”

  • Illustrative Examples of Effective Marginal Tax Rates Faced by Married and Single Taxpayers: Supplemental Material for Effective Marginal Tax Rates for Low- and Moderate-Income Workers
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