What is a Tax Bracket?

[Updated for Tax Year 2025]

Did you know that tax rates can vary depending on how you earn your money? Not every dollar you bring in is taxed at the same rate. 

The United States uses a progressive tax system. Under this system, the US tries to collect more taxes from those who have higher incomes during the year. In essence, a million-dollar earner pays more in total taxes. They are also placed in a higher tax bracket, which results in more of their income being taxed than someone who earns far less.

So, what is a tax bracket exactly?

One of the ways our tax system achieves this is through tax brackets. A tax bracket is simply a range of incomes that are taxed at a set rate based on your taxable income. 

There are seven tax brackets of varying size, with the lowest bracket being subject to a 10% marginal tax rate and the highest being subject to 37% marginal tax rate. Your marginal tax rate will be dependent upon your taxable income within the brackets.

How do I know which tax bracket I’m in?

Let’s look at a real-world example. Say you’re a single filer with $60,000 in taxable income (that’s your income after deductions). Here’s how your taxes would be calculated:

●  The first $11,925 is taxed at 10%

●  Income from $11,926 to $48,475 is taxed at 12%

●  The remaining amount is taxed at 22%

Even though you’re “in the 22% bracket,” your effective tax rate, which is what you actually pay overall, is much lower because only a small portion of your income is taxed at that rate.

For married couples filing jointly, the portion of income taxed at 10% is twice as large; this means your threshold taxed at 10% goes up to $23,850 instead of $11,925 if you were filing single.

Here’s a handy tip: knowing your tax bracket helps you understand the value of deductions. In the 22% bracket, a $1,000 deduction saves you $220 in taxes.

One important note to keep in mind: not all kinds of income follow these brackets. Long-term capital gains and qualified dividends are taxed at specific rates (0%, 15%, or 20%), while short-term gains are taxed as regular income.

Are you saying my tax brackets are different from last year?

The income thresholds for each tax bracket are updated each year. However, the seven tax bracket percentages have remained unchanged since tax year 2018.

The percentages were due to revert to higher, pre-2018 levels at the end of 2025, but were made permanent by legislation known as the “One Big Beautiful Bill,” which was passed in July 2025. [2] 

The current tax brackets are: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

The income thresholds for these brackets are below in the charts:

2024 Rates

Rates	Threshold for Single	Threshold for MFJ
10%	$0 – $11,600	$0 – $23,000
12%	$11,601 – $47,150	$23,201 – $94,300
22%	$47,151 – $100,525	$94,301 – $201,050
24%	$100,526 – $191,950	$201,051 – $383,900
32%	$191,951 – $243,725	$383,901 – $487,450
35%	$243,726 – $609,350	$487,451 – $731,200
37%	$609,351 and over	$731,121 and over

2025 Rates

Rates	Threshold for Single	Threshold for MFJ
10%	$0 to $11,925	$0 to $23,850
12%	$11,926 to $48,475	$23,851 to $96,950
22%	$48,476 to $103,350	$96,951 to $206,700
24%	$103,351 to $197,300	$206,701 to $394,600
32%	$197,301 to $250,525	$394,601 to $501,050
35%	$250,526 to $626,350	$501,051 to $751,600
37%	$626,351 and over	$751,601 and over

Understanding how tax brackets work, as well as which bracket you are in, can help you make better-informed financial decisions. But you don’t need to know how to calculate tax brackets when you use TurboTax. TurboTax will automatically figure out your tax bracket based on your information and give you the tax deductions and credits you deserve based on your entries.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund — guaranteed.