Tax Bracket
A range of income taxed at a specific rate within the progressive federal income tax system.
How It Works
Tax brackets define the income ranges and corresponding rates in the U.S. progressive tax system. For 2025, there are seven brackets with rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The bracket thresholds differ by filing status — married filing jointly thresholds are roughly double those for single filers, while head of household falls in between. The IRS adjusts bracket thresholds annually for inflation, which prevents "bracket creep" where inflation pushes taxpayers into higher brackets without real income gains. In 2025, the thresholds increased by about 2.8% from the prior year. Each bracket is like a bucket that fills up sequentially. Your first dollars of taxable income fill the 10% bucket, then overflow into the 12% bucket, and so on. Only the income within each bucket is taxed at that bucket's rate. This is why moving into a "higher tax bracket" doesn't retroactively raise the rate on all your income — it only affects income above the threshold. Bracket planning is a core tax strategy: timing income and deductions to stay in lower brackets can save thousands over a lifetime. Many taxpayers aim to "fill up" their current bracket with Roth conversions or capital gain harvesting before year-end.
Related Terms
Marginal Tax Rate
The tax rate applied to the last dollar of your taxable income, determined by which federal tax bracket that dollar falls into.
Effective Tax Rate
The average percentage of your total income that you actually pay in federal income tax, calculated by dividing total tax owed by total income.
Filing Status
Your tax classification based on marital and family status, which determines your standard deduction amount, tax bracket thresholds, and eligibility for certain credits.
Taxable Income
The portion of your income subject to federal income tax, calculated as adjusted gross income minus deductions (standard or itemized).