Tax Brackets

Federal tax brackets determine the rate at which portions of your taxable income are taxed. For tax year 2025 (filing in 2026) there are seven federal income tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These rates are applied progressively, so different portions of your income are taxed at different rates.

Key points

• The U.S. tax system is progressive: lower portions of income are taxed at lower rates and higher portions at higher rates.
• Most taxpayers pay multiple rates rather than a single rate on their entire income.
• Bracket thresholds vary by filing status (single, married filing jointly, married filing separately, head of household) and are adjusted for inflation annually.
• You can reduce taxable income through deductions and reduce tax owed with credits.

How progressive tax brackets work

Each bracket applies only to the portion of taxable income that falls within that bracket’s range. Your marginal tax rate is the rate that applies to your last dollar of taxable income. Your effective tax rate is the total tax paid divided by your taxable income — typically much lower than your marginal rate because of the progressive structure.

Example: if a single filer has $50,000 of taxable income in 2025:
* First $11,925 taxed at 10% = $1,192.50
Next $11,926–$48,475 ($36,549) taxed at 12% = $4,385.88
Remaining $1,525 taxed at 22% = $335.50
Total tax = $1,192.50 + $4,385.88 + $335.50 = $5,913.88
Effective tax rate = $5,913.88 ÷ $50,000 ≈ 11.8%

Note: the dollar ranges above are an example for the single filing status; your ranges depend on filing status and annual inflation adjustments.

Marginal vs. Effective Tax Rate

• Marginal tax rate: the rate applied to the next dollar you earn (your top bracket).
• Effective tax rate: total tax divided by total taxable income — a measure of the average rate you actually pay.

How to find your tax bracket

1. Determine your filing status (single, married filing jointly, etc.).
2. Calculate taxable income (gross income minus adjustments and deductions).
3. Compare taxable income to the IRS tax-bracket tables or use an online tax-bracket calculator to see which brackets apply to your income.

Reducing your taxes

Ways to lower taxable income and tax liability:
* Maximize pre-tax retirement contributions (401(k), traditional IRA).
Contribute to a Health Savings Account (HSA) if eligible.
Use Flexible Spending Accounts (FSA) for eligible expenses.
Claim available tax credits (e.g., Child Tax Credit, Earned Income Tax Credit, education credits, Saver’s Credit).
Itemize deductions when they exceed the standard deduction, or take the standard deduction when it’s larger.

State tax considerations

• Several states have no broad personal income tax (e.g., Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Wyoming).
• Some states tax only investment income (Washington) or are phasing out taxes on interest and dividends (New Hampshire).
• Other states use flat-rate systems or multiple brackets; top state marginal rates vary widely (California’s top rate is among the highest at 13.3%). State rules may deviate from federal rules on deductions and exemptions.

Common questions

• How much income is taxed at the top federal rate?
  The top federal rate (37% for 2025) applies only to income above the threshold for your filing status (for example, in 2025 the 37% rate applies to income above about $626,350 for single filers and $751,600 for married filing jointly).
• Is there a 40% federal bracket?
  No — the top federal bracket in 2025 is 37%.

Bottom line

Federal income tax in the U.S. is progressive: your income is divided into tiers and taxed at increasing rates as income rises. Knowing the difference between marginal and effective tax rates and using deductions and credits wisely can lower your tax burden. Check the current IRS tables or a tax calculator each year because bracket thresholds change with inflation and your personal circumstances (income and filing status) can shift which brackets apply.