Tax Bracket

Definition

A tax bracket is a range of incomes subject to a certain income tax rate in a progressive tax system. The US federal income tax system has seven brackets for 2025: 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 — in reality, only the income within each bracket is taxed at that bracket's rate (marginal tax rate). For example, a single filer earning $50,000 pays 10% on the first $11,600, 12% on income from $11,601-$47,150, and 22% on the remaining $2,850. Your effective tax rate (total tax divided by total income) is always lower than your marginal rate.