The IRS has set many tax deductions and benefits in their place for individuals. Unfortunately, some taxpayers who earn a great deal of income can see these benefits phased out as their income climbs. Marginal tax rate is the rate of tax each and every on your last (or highest) quantity of income. In the described example, the individual is being taxed with a marginal tax rate of 25% with taxable income of $45,000. This should mean he or she is paying 25% federal tax on her last dollars o...