Final answer:
The highest marginal tax rate of 37% in 2019 applied to single filers with incomes over $510,300 and married couples filing jointly over $612,350. This rate only applies to income above these thresholds, and all income below is taxed at the corresponding lower rates. The concept of marginal tax rates means individuals pay progressively higher rates as their income enters higher tax brackets.
Step-by-step explanation:
As of 2019, the highest marginal tax rate of 37% applied to single filers with incomes above $510,300 and married couples filing jointly with incomes above $612,350. After the Tax Cuts and Jobs Act of 2017, tax brackets were adjusted and the highest tax rate was reduced from 39.6% to 37%. It's important to understand that this tax rate applies only to the income above the specified threshold; the portion of income below this level is taxed at the lower rates of the various tax brackets leading up to 37%. For example, a single earner making $520,000 would pay the 37% rate only on the amount over $510,300; the rest of their income would be taxed at the lower brackets of 10%, 12%, 22%, 24%, 32%, and 35% respectively.
To clarify how marginal tax rates work, consider a single taxpayer earning $35,000 per year. With hypothetical tax brackets taxing income from $0 to $9,075 at 10%, from $9,075 to $36,900 at 15%, and income from $36,900 and beyond at 25%, this taxpayer's marginal tax rate would be 15%. This rate is applied only to the income within that bracket, not the entire income.