Marginal vs. Average Tax Rate

A client expects to recognize an additional $20,000 of ordinary income in 2026. She asks her CFP® professional how much additional federal income tax she will owe.

Which tax rate is MOST relevant in estimating the tax on the additional income?

  1.  Effective tax rate
  2.  Average tax rate
  3.  Marginal tax rate
  4. Capital gains tax rate