Definition of Incremental tax:
Incremental tax describes a tax system in which the tax percentage that a person pays increases based on their income level. This is also called a progressive income tax or a marginal rate tax.
Incremental increases in a tax that are based upon a taxpayers income level. Typically, as income gets higher, the tax rate will increase - especially for those in upper income brackets. This type of tax could actually have a negative effect on the profit received from some investments.
In an incremental tax system, those with higher incomes pay a larger portion of the taxes collected by the state, and therefore contribute more to a state’s revenue than those with lower incomes.
How to use Incremental tax in a sentence?
- Incremental taxes are also known as progressive taxes.
- These taxes are incremental because they increase the tax you pay on greater increments of income.
- Incremental taxes are also known as redistributive taxes.
Meaning of Incremental tax & Incremental tax Definition