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The share of income taxes paid by the top 1 percent increased slightly from 38.47 percent in 2017 to 38.77 percent in 2019. This means that, although you fall under the 22% tax rate, your effective tax rate is about 16.8%, which is the average tax rate of the total taxable income you\u2019re required to pay. In 2019, the top 1 percent of taxpayers accounted for more income taxes paid than the state income tax rates<\/a> bottom 90 percent combined. The top 1 percent of taxpayers paid $612 billion in income taxes while the bottom 90 percent paid $461 billion in income taxes. The top 1 percent (taxpayers with AGI of $546,434 and above) earned 20.1 percent of total AGI in 2019 and paid 38.8 percent of all federal income taxes. The marginal tax rate is the tax rate paid on the last dollar of taxable income.<\/p>\n For example, if you calculate that you have tax liability of $1,000 based on your taxable income and your tax bracket, and you are eligible for a tax credit of $200, that would reduce your liability to $800. In other words, you would only owe $800 to the federal government. Your first $11,000 of earnings will be taxed in the lowest tax bracket, at 10%; the next tier of your income will be taxed at a rate of 12%. Once your income progresses to its highest tax bracket\u201422% in this example\u2014you\u2019ve hit your marginal tax rate. Then, we apply the appropriate tax bracket and rate(s) based on taxable income and filing status to calculate what amount in taxes the government expects you to pay. The higher income that taxpayers realize can then be funneled back into the economy.<\/p>\nIRS provides tax inflation adjustments for tax year 2023<\/h2>\n