SALARY · 4 MIN READ
Why does the highest tax rate not apply to your entire salary?
Your marginal tax rate applies only to the portion of taxable income within your highest bracket—not to all of your taxable income.
How taxable income is divided into brackets
After compulsory insurance, personal and dependent deductions, and other eligible deductions, taxable income is allocated progressively across the applicable brackets.
Each portion is taxed only at the rate for that bracket. Moving into a higher bracket therefore does not cause your entire salary to be retaxed at the highest rate.
How to verify the calculation
Compare total tax with the sum of tax charged on each slice of income. HCMetric shows both taxable income and the tax generated in every bracket so you can check the result.