A tax bracket is a range of income taxed at a specific rate in a progressive tax system. Only the income within each bracket is taxed at that bracket's rate — not your entire income.
How Tax Brackets Work
The U.S. uses a progressive (or "marginal") tax system with seven brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. A common misconception is that moving into a higher bracket means all your income is taxed at the higher rate — this is false.
Income fills each bracket sequentially. For a single filer in 2025, the first $11,925 is taxed at 10%, income from $11,926-$48,475 at 12%, and so on. Only the portion exceeding each threshold is taxed at the higher rate.
Marginal vs. Effective Tax Rate
- Marginal Rate: The rate on your last dollar of income (your highest bracket)
- Effective Rate: Your total tax divided by total income — the average rate you actually pay
Someone in the 22% bracket typically pays an effective rate of 12-15% because lower brackets apply to earlier income.
Real-World Example
Single filer earning $75,000 in 2025. After the $15,000 standard deduction, taxable income is $60,000. Tax: ($11,925 × 10%) + ($36,550 × 12%) + ($11,525 × 22%) = $1,193 + $4,386 + $2,536 = $8,115. Effective rate: 10.8% — not 22%.
Frequently Asked Questions
Does earning more ever result in less take-home pay?
No. Because only the income in the new bracket is taxed at the higher rate, earning more always results in more take-home pay. The only exception involves certain benefit phase-outs (like ACA subsidies) at specific income thresholds.
What are the 2025 federal tax brackets?
For single filers: 10% ($0-$11,925), 12% ($11,926-$48,475), 22% ($48,476-$103,350), 24% ($103,351-$197,300), 32% ($197,301-$250,525), 35% ($250,526-$626,350), 37% (over $626,350).
How do state taxes interact with federal brackets?
State income taxes are separate from federal. Some states (TX, FL, NV, WA, TN, WY, SD, AK, NH) have no state income tax. Others have flat rates or their own progressive brackets.