What is Marginal tax rate?
Your marginal tax rate is the rate of tax you pay on your next unit of income. Because income tax is charged in bands, it is usually higher than your average rate across all your income. A deduction saves tax at roughly your marginal rate, and taxable withdrawals are taxed at the marginal rate you face in the year you take them.
Why Marginal tax rate matters
Comparing your marginal rate today with the rate you expect when withdrawing is the core of the tax-free versus tax-deferred trade-off.