Live revision! Join us for our free exam revision livestreams Watch now


Effective marginal tax rate

The effective marginal tax rate is the tax rate on each extra £1 of income – it takes into account the impact of direct taxes (such as income tax) but also the possible withdrawal of means-tested welfare benefits if people take a paid job. A high effective marginal tax rate is a root cause of the unemployment trap, it creates disincentives to find work.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.