Marginal Rate
The marginal rate is the tax percentage on your last shekel of income – determined by the bracket your top income falls in. For ₪300,000 income, the marginal rate is 35% (the bracket for ₪242,041–₪504,360).
Effective Rate
The effective rate is total tax paid divided by total income. It is always lower than the marginal rate due to progressive brackets. For ₪300,000 income with a marginal rate of 35%, the effective rate is approximately 20%.
Why It Matters
Understanding this distinction prevents the common misconception that earning more always costs more in tax than it provides. Taking on additional income is always worthwhile – even at the top marginal rate, you keep at least 50% of each additional shekel earned.
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.