When folks ask that question, they’re really asking for your marginal tax rate.

That’s because portions of your income fall into different brackets, which are assigned tax rates that increase on a graduated scale. Generally speaking, the first dollar you make will be taxed at a lower rate than the last dollar you make.

Your taxable income is not the salary your boss told you you’d make when you got your job, but the amount of income left over after you’ve made your pre-tax contributions to your 401(k) and after you’ve subtracted the tax breaks to which you’re entitled.

The income ranges that define tax brackets are adjusted for inflation, change yearly and differ depending on your filing status (e.g. single or married filing jointly).

Tax rates can change as well.

Here’s an example of how income is taxed: Say you are single and report $80,000 in taxable income for the 2012 tax year (filing in 2013). In accordance with the income ranges defining federal tax brackets for single filers in 2012, the first $8,700 of your income is taxed at 10%; dollars $8,701 through $35,350 are taxed at 15%; dollars $35,351 through $85,650 are taxed at 25%.

When people ask you what your tax bracket is, they’re really asking for your marginal tax rate. That is, the percent at which the highest portion of your income is taxed. In the example above, if you report $80,000 of taxable income for 2012, your marginal tax rate is 25% — the rate at which the last dollar of that $80,000 is taxed.

Your marginal rate is the rate you use to calculate the value of a deduction. For example, if your marginal rate is 28%, a $100 deduction reduces your taxable income by $28 (100 x 0.28).

Your effective rate, meanwhile, is the overall percentage of your taxable income that was actually paid in income taxes at the end of the day. And that rate will be lower than your marginal rate because much of your income will be taxed at rates lower than your top rate.

You should also be aware of what’s known as your combined tax bracket. That’s the sum of your federal tax bracket and your state tax bracket, minus the amount of state taxes you can deduct from your federal return.

For example, if your top federal rate is 28% and your state tax rate is 5%, your combined rate is 33% if you take the standard deduction on your federal return.

But if you itemize deductions on your return, your combined rate is likely to be less since you may deduct the state income tax you pay on your federal return, unless you’re subject to the alternative minimum tax.

Your combined tax rate determines how much tax you’ll owe on income from your investments. If your combined bracket is 33%, then 33% of your investment income will go to the federal and state governments. Put another way, you’ll be able to keep 67% of your investment income.

If you’re like most people, you probably pay Uncle Sam throughout the year by having your employer withhold tax from your paychecks.

Your employer, using tables supplied by the government, determines how much of your paycheck should be withheld based on information you provide.

Surprised? That’s because you’ve probably forgotten about that Form W-4 you filled out, something most people do when they start a new job.

The W-4, which can be amended at any time, lets you mark your tax filing status (single, married, etc.) and the number of allowances you want to take.

An allowance essentially reduces the amount of taxes withheld, and increases the amount of your take-home pay. Each allowance represents an exemption, credit, or some other tax benefit you plan to claim when you fill out your return.

(For detailed instructions on adjusting your tax withholding, see IRS Publication 919 .)

Your goal at the beginning of every tax year should be to have withheld at least 90% of what you think you’ll owe for that year, but not much more.

If you use the worksheet that accompanies your W-4, you should definitely have that 90% covered, says Tony Bardi, an enrolled agent in Gresham, Ore.

Each January, your employer sends you and the IRS a Form W-2 that reports your earnings for the prior tax year and the total amount of tax you had withheld.

You’re then responsible for calculating how much more you owe (and paying the difference by April 15), or, figuring out how much the IRS should refund you if you overpaid.

Although a lot of people consider a refund found money, the truth is, getting a refund check just means you’ve given the government an interest-free loan. It’s money you earned and should have had access to throughout the year.

Say you get a $1,200 refund (the average is about $2,900). You could have pocketed more money if you had adjusted your withholding so that you got an extra $100 a month and invested that money in an interest-bearing account.

Or, if you carried a credit card balance, the extra amount could have been used to pay off some of your high-interest debt.