Finance Maxxing
Income Tax Basics
Tax Brackets
Progressive rate tiers applied to taxable income.
The U.S. federal income tax uses a progressive system with seven brackets. Each bracket applies only to income within that range — not your entire income.
2025 Federal Brackets (Single)
| Taxable Income | Rate |
|---|---|
| $0 – $11,925 | 10% |
| $11,926 – $48,475 | 12% |
| $48,476 – $103,350 | 22% |
| $103,351 – $197,300 | 24% |
| $197,301 – $250,525 | 32% |
| $250,526 – $626,350 | 35% |
| Over $626,350 | 37% |
How It Works
A common misconception is that earning more "pushes all your income" into a higher bracket. In reality, only the income within each bracket range is taxed at that rate.
Example: A single filer with $60,000 of taxable income pays:
- 10% on the first $11,925 = $1,193
- 12% on $11,926 – $48,475 = $4,386
- 22% on $48,476 – $60,000 = $2,536
- Total: $8,114 (effective rate: ~13.5%, not 22%)
TCJA Sunset
Under the Tax Cuts and Jobs Act (TCJA), these rates are scheduled to sunset after 2025, reverting to pre-TCJA rates:
| Current Rate | Pre-TCJA Rate |
|---|---|
| 10% | 10% |
| 12% | 15% |
| 22% | 25% |
| 24% | 28% |
| 32% | 33% |
| 35% | 35% |
| 37% | 39.6% |
Note: Bracket thresholds differ by filing status. Married Filing Jointly brackets are roughly double the single brackets for most tiers.
Sources
More in Income Tax Basics
Marginal Tax Rate
The tax rate on your next dollar of income.
Effective Tax Rate
Your average tax rate across all income.
Taxable Income
Income remaining after deductions, subject to tax.
Adjusted Gross Income (AGI)
Gross income minus above-the-line deductions.
Modified Adjusted Gross Income (MAGI)
AGI with certain deductions added back, used for eligibility tests.
Filing Status
Determines your bracket thresholds and standard deduction.
Marriage Penalty & Bonus
Tax impact of filing jointly vs. two singles.
Tax Cuts and Jobs Act (TCJA)
2017 law that lowered rates and doubled the standard deduction.