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Assume that you have a marginal tax rate of 28 percent, a state income tax rate of 4 percent, and have a city income tax rate of 1 percent. The tax for Social Security and Medicare is 7.65 percent. What would be the effective marginal tax rate on your last dollar of earnings

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Answer: 40.65%

Explanation:

The Effective Marginal Tax rate is the amount of a person's additional dollar in income that is taken as taxes.

This means therefore, that all the taxes applicable to an additional dollar are added up to find the Effective Marginal Tax Rate.

= Marginal tax rate + State income tax rate + City income tax rate + Social Security and Medicare

= 28 + 4 + 1 + 7.65

= 40.65%