Understanding how federal income tax brackets work is key for effective financial planning, especially as you navigate your income, tax credits and deductions, and potential tax strategies.
So, let’s look at tax brackets and marginal tax rates for 2024 and 2025, beginning with some basics and key points.
Tax Brackets Overview
What are tax brackets?
Tax brackets are the ranges of income taxed at specific rates.
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There are seven federal tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
It's important to note that these rates generally don't change unless Congress passes major tax legislation. (That happened with the 2017 Tax Cuts and Jobs Act (TCJA, also known as the "Trump tax cuts.")
However, the tax brackets tied to the rates change yearly since they are adjusted for inflation.
These rates apply to your taxable income, which is your total income minus deductions and credits.
And here's the important part. Your entire income thankfully isn't taxed at the rate of your highest bracket. Instead, the United States uses a progressive tax system with marginal tax rates.
That means only the portion of your income that falls into each bracket is taxed at that bracket's rate.
Key Points
Marginal Rates: Your tax bracket represents the highest rate you'll pay on any portion of your income, not your entire income.
Inflation Adjustments: The income ranges for each bracket are adjusted annually for inflation, potentially moving you into a different bracket even if your income stays the same.
Filing Status: Your tax bracket depends on your filing status (single, married, filing jointly, etc.), and each status has different income ranges.
So, with all of that in mind, here are the tax brackets for 2024 and 2025. Further below, we consider some examples of how income tax brackets and marginal tax rates work.
2024 Federal Tax Brackets
2024 tax brackets
Here are the inflation-adjusted tax brackets for the 2024 tax year (returns you'll typically file by Tax Day in April 2025).
| Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
|---|---|---|
| 10% | Not over $11,600 | Not over $23,200 |
| 12% | Over $11,600 but not over $47,150 | Over $23,200 but not over $94,300 |
| 22% | Over $47,150 but not over $100,525 | Over $94,300 but not over $201,050 |
| 24% | Over $100,525 but not over $191,950 | Over $201,050 but not over $383,900 |
| 32% | Over $191,950 but not over $243,725 | Over $383,900 but not over $487,450 |
| 35% | Over $243,725 but not over $609,350 | Over $487,450 but not over $731,200 |
| 37% | Over $609,350 | Over $731,200 |
| Tax Rate | Taxable Income (Married Filing Separately) | Taxable Income (Head of Household)) |
|---|---|---|
| 10% | Up to $11,600 | Not over $16,550 |
| 12% | Over $11,600 but not over $47,150 | Over $16,550 but not over $63,100 |
| 22% | Over $47,150 but not over $100,525 | Over $63,100 but not over $100,500 |
| 24% | Over $100,525 but not over $191,950 | Over $100,500 butnot over $191,950 |
| 32% | Over $191,950 but not over $243,725 | Over $191,950 but not over $243,700 |
| 35% | Over $243,725 but not over $365,600 | Over $243,700 but not over $609,350 |
| 37% | Over $365,600 | Over $609,350 |
2025 Tax Brackets
New IRS 2025 tax brackets
For planning, here are the inflation-adjusted tax brackets for 2025. (Note: These brackets apply to federal income tax returns typically filed in early 2026.)
It's also essential to remember that, for now, the associated tax rates remain the same (currently 10%, 12%, 22%, 24%, 32%, 35%, and 37%).
Also, the IRS has announced the 2025 standard deduction. For more information see The New Standard Deduction is Here.
| Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
|---|---|---|
| 10% | Not over $11,925 | Not over $23,850 |
| 12% | Over $11,925 but not over $48,475 | Over $23,850 but not over $96,,950 |
| 22% | Over $48,475 but not over $103,350 | Over $96,950 but not over $206,700 |
| 24% | Over $103,350 but not over $197,300 | Over $206,700 but not over $394,600 |
| 32% | Over $197,300 but not over $250,525 | Over $394,600 but not over $501,050 |
| 35% | Over $250,525 but not over $626,350 | Over $501,050 but not over $751,600 |
| 37% | Over $626,350 | Over $751,600 |
| Tax Rate | Taxable Income (Married Filing Separately) | Taxable Income (Head of Household)) |
|---|---|---|
| 10% | Not over $11,925 | Not over $17,000 |
| 12% | Over $11,925 but not over $48,475 | Over $17,000 but not over $64,850 |
| 22% | Over $48,475 but not over $103,350 | Over $64,850 but not over $103,350 |
| 24% | Over $103,350 but not over $197,300 | Over $103,350 but not over $197,300 |
| 32% | Over $197,300 but not over $250,525 | Over $197,300 but not over $250,500 |
| 35% | Over $250,525 but not over $375,800 | Over $250,500 but not over $626,350 |
| 37% | Over $375,800 | Over $626,350 |
How Tax Brackets Work: Marginal Rates
Marginal tax rate definition: How do tax brackets work?
Now that you've seen the tax brackets, let's delve into some examples to show how the brackets and income tax rates work.
Suppose your filing status is single, and you had $100,000 taxable income in 2024. You may think that since $100,000 falls into the 22% federal bracket, your tax would be a flat $22,000. But thankfully, that’s not the case.
Instead, your $100,000 will be taxed at a marginal tax rate so that only some of your income is taxed at the maximum rate for your income that year (22%). The rest of your income is taxed at the federal income rates below 24%, i.e., 10% and 12%.
Here’s how the marginal tax rate works with this example:
- The first $11,600 of your income is taxed at the 10% rate.
- The next $35,550 of your income (i.e., the amount from $11,601 to $47,150, which will make sense when you see the tax brackets below) is taxed at the 12% federal rate.
- The following $52,850 of your income (from $47,151 to $100,000) is taxed at the 22% federal tax rate.
- That leaves $4,627 of your taxable income (the amount over $95,373) that is taxed at the 24% rate for your federal tax bracket.
Given marginal tax rates, the estimated total federal tax on your $100,000 of taxable income would be about $17,053. That is about $4,946 less than if a flat 22% federal tax rate applied to your entire $100,000 of income.
Remember: We're talking about federal tax. State tax rates and amounts due, if any, will vary.
The chart below shows estimates of how much of your income would be taxed at each rate.
| Income Portion | Federal Rate Applied | Approx. Amount of Tax |
|---|---|---|
| First $11,600 | 10% | $1,160 |
| $33,550 | 12% | $4,266 |
| $52,850 | 22% | $11,627 |
Total Estimated Tax: $17,053
Take another example of someone single with a taxable income for the 2024 tax year of $40,000. You might think your tax would be $4,800 since $40,000 falls into the 12% federal bracket. But that’s not the case.
Instead, your $40,000 will get taxed at a marginal tax rate, so only some of your income is taxed at the maximum tax rate for your income that year (12%). The rest of your income gets taxed at the federal income rate below 12%, i.e.,10%.
Here’s how the marginal tax rate works with this example:
- The first $11,600 of your income is taxed at the 10% tax rate.
- The next $28,400 of your income (i.e., the income between $11,601 to $40,000, which will make sense when you see the tax brackets below) gets taxed at the 12% federal rate.
| Income Portion | Federal Tax Rate Applied | Approx. Amount of Tax |
|---|---|---|
| First $11,600 | 10% | $1,160 |
| $28,400 | 12% | $3,408 |
The total estimated federal tax of $4,568 is still a bit ($232) lower than the $4,800 you would be taxed if a flat 12% federal rate applied to your $40,000 of income.
The chart above shows estimates of how much of your income would be taxed at each rate.
Note: We're talking about federal tax. State tax rates and amounts due, if any, will vary.
Total Estimated Tax: $4,568
Marginal tax rate vs. effective tax rate
It's important to know that the marginal tax rate and your effective tax rate differ. As mentioned, the marginal tax rate is the percentage of tax applied to the next dollar of income.
On the other hand, the effective tax rate is the overall percentage of income an individual pays in taxes after considering all deductions, exemptions, and credits.
To calculate your effective tax rate, divide the total taxes paid by the total taxable income. For example, if an individual earned $50,000 and paid $7,000 in taxes, their effective tax rate would be 14% ($7,000 / $50,000 = 0.14 or 14%).
If you have any questions about your tax liability, it's always a good idea to seek advice from a qualified tax professional or financial advisor.
Future Projections
What happens to tax brackets after 2025?
There's been a lot of interest in what might happen with tax brackets and federal income tax rates after this year ends.
As you may know, 2025 was already expected to bring legislative debate over changes in tax policy. This is due to the scheduled expiration of several key tax provisions in the TCJA at the end of this year.
Now that Congress and the White House will be led by Republicans, it is likely that a TCJA extension is in the works. Trump has called for one "big, beautiful" bill in the first 100 days of this new administration.
Lawmakers are expected to use the budget reconciliation process, which requires only a simple majority in the U.S. Senate, to pass legislation to address tax cuts, energy, and the border.
Key tax priorities could include making individual tax cuts permanent, maintaining the lower corporate tax rate, expanding certain business deductions, and addressing the cap on state and local tax deductions (SALT).
However, narrow Republican majorities in both houses and deficit concerns may require compromising on key provisions or considering temporary extensions.
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