US Federal Tax Brackets

The US uses a progressive tax system with seven marginal tax brackets ranging from 10% to 37% for 2025. Each bracket applies only to the portion of your taxable income that falls within its range, not your entire income. This means moving into a higher bracket only affects the dollars above that threshold.

No. A common misconception is that earning more pushes all your income into a higher bracket. In reality, only the income within each bracket is taxed at that bracket's rate. For example, if you are single with $50,000 in taxable income for 2025, the first $11,925 is taxed at 10%, the next portion at 12%, and so on.

The IRS adjusts tax bracket thresholds and the standard deduction annually for inflation using the Chained Consumer Price Index (C-CPI-U). This prevents "bracket creep," where inflation would otherwise push taxpayers into higher brackets without any real increase in purchasing power. The 2025 brackets reflect these inflation adjustments.

Your marginal tax rate is the rate applied to your last dollar of taxable income, determined by the highest bracket you fall into. Your effective tax rate is the average rate you actually pay, calculated by dividing your total tax by your total taxable income. The effective rate is always lower than the marginal rate in a progressive system.