EuroCalc

What is Marginal Tax Rate?

The marginal tax rate is the percentage of tax paid on the next franc or euro of additional income — the rate that applies to the highest bracket your income reaches.

Your marginal rate is the rate that applies to the last unit of income you earn. It is the relevant number for any decision about earning more: taking a bonus, working overtime, contributing to pension or doing freelance work on the side.

The marginal rate is almost always higher than the effective rate, because lower slices of income are taxed at lower rates. In Germany and France marginal rates can reach 45% (plus surcharges), pushing real marginal costs of additional income above 50% once social contributions are included.

Tax planning targets the marginal rate. Pillar 3a contributions in Switzerland or Riester-Rente contributions in Germany are deductible from taxable income, so the tax saving equals the contribution times the marginal rate.

Formula
Marginal tax rate = ΔTax / ΔIncome
Example

A Swiss employee in the 30% marginal bracket who contributes the maximum pillar 3a of CHF 7,258 saves roughly CHF 2,177 in tax that year.

Use the calculator

Income Tax Estimator

Estimate your net income and effective tax rate for Switzerland, Germany, France and Italy.

Open calculator

Related terms

Frequently asked questions

Is the marginal rate the same as my tax bracket?+

Yes — the marginal rate is the rate of the highest bracket your income reaches.

Why do tax-planning calculations focus on marginal rate?+

Because every additional CHF earned or saved in income is taxed at the marginal rate, so deductions yield savings at that rate.

Can marginal rate exceed 100%?+

In rare cases means-tested benefits phase out as income rises, producing effective marginal rates above 100% — a known policy flaw.