What Are Tax Brackets?

By Matthew Frankel, CFP – Updated Feb 26, 2025 at 12:27 AM EST

Key Points

Tax brackets in the U.S. are progressive, ensuring higher earners pay more.
Your actual tax rate only applies to income within specified bracket ranges.
Deductions and credits can significantly lower your taxable income.
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The United States tax code isn't exactly simple. However, the basic ideas behind how it works are rather easy to understand. One of the most important aspects of the tax code that you need to understand is the tax bracket.

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Sticky note saying Tax Bracket next to calculator. — Image source: Getty Images.

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There are different income ranges for different tax filing statuses. Taxpayers who file their returns as single have a set of income ranges that correspond to these seven percentages differently from married couples who file joint returns. Heads of household and married couples filing separately also have different income brackets to accompany the tax rates.

It's also worth clarifying that these tax brackets apply only to your taxable income, which differs from your salary, adjusted gross income (AGI), or other income metrics. In other words, just because your salary is $75,000 doesn't necessarily mean you'll be in the tax bracket that corresponds with this income.

Your taxable income is the number left after subtracting all your adjustments and deductions. If you contribute to retirement accounts, pay mortgage interest, donate to charity, or pay lots of state and local taxes, your taxable income can be significantly less than the amount of money you actually bring in.

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Data source: IRS.

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There are a couple of important notes. First, this is the total tax the IRS collects from you, not how much you'll owe when you file your taxes. Most employees pay this gradually via payroll deductions, and many overpay and are due a tax refund. This is also before any tax credits are applied, so if you qualify for the Child Tax Credit or any other credits, they will be deducted from the calculated tax.

Finally, it's also important to note that most states have an income tax and typically use their own tax brackets. The specific tax rates and income ranges here only apply to federal income tax, so be sure to check with your state's Department of Revenue so you know how that portion of your taxes works.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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