Marginal Rate

Your marginal tax rate is the rate applied to the next dollar of income you earn. The U.S. uses a progressive tax system where different portions of your income are taxed at different rates. Your prediction market profits sit on top of your other income and are taxed at whatever bracket they fall into.

2024 federal tax brackets (single filer)

• 10%: $0 – $11,600
• 12%: $11,601 – $47,150
• 22%: $47,151 – $100,525
• 24%: $100,526 – $191,950
• 32%: $191,951 – $243,725
• 35%: $243,726 – $609,350
• 37%: Over $609,350

Example

You earn $85,000 in salary (22% bracket) and $15,000 from prediction markets. Your total income is $100,000. The prediction market income is taxed at 22% — your marginal rate — resulting in $3,300 in additional federal tax.

Why marginal rate matters for method comparison

Your marginal rate is the key input for comparing tax methods on predictiontaxes.com. Higher brackets amplify the savings from Section 1256's 60/40 split, since more of the gain gets shifted to the lower long-term rate.