The dynamic salt effect in charge-transfer reactions is investigated theoretically in this paper. Free-energy surfaces are derived based on a nonequilibrium free-energy functional. Reaction coordinates are clearly defined. The solution of the reaction-diffusion equation leads to a rate constant depending on the time correlation function of the reaction coordinates. The time correlation function of the ion-atmosphere coordinate is derived from the solution of the Debye-Falkenhagen equation. It is shown that the dynamic salt effect plays an important role in controlling the rate of charge-transfer reactions in the narrow-window limit but is balanced by the energetics and the dynamics of the polar-solvent coordinate. The simplest version of the theory is compared with an experiment, and the agreement is fairly good. The theory can also be extended to charge-transfer in the class of electrolytes that has come to be called "ionic fluids."