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The IRS has set many tax deductions and benefits in their place for citizens. Unfortunately, some taxpayers who earn a top level of income can see these benefits phased out as their income climbs.

Marginal tax rate will be the rate of tax each and every on your last (or highest) amount of income. In the last described example, the individual is being taxed with a marginal tax rate of 25% with taxable income of $45,000. As well as mean he or she is paying 25% federal tax on her last dollars of income (more than $33,950).

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