What Are Tax Brackets?

Taxes may not be your favorite topic, but understanding federal tax brackets is key to your financial health. The U.S. government uses tax brackets to calculate how much tax you owe based on your income — and knowing how taxes work can help you plan smarter, reduce your tax bill, and keep more of your hard-earned money. So, what are tax brackets? Let’s break it down step by step.

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How do tax brackets work?

Tax brackets divide your taxable income into ranges, with each range taxed at a specific percentage. In this progressive system, lower portions of income are taxed at lower rates, while higher portions are taxed at higher rates.

Example:

Let’s say your taxable income is $70,000:

• The first $11,925 is taxed at 10%.
• The portion from $11,926 to $48,375 is taxed at 12%.
• The portion above $48,375 is taxed at 22%.

This means that when you pay the taxes you owe, you only pay the higher rate on the part of your income that falls within that bracket — not on your entire income. Tax prep software calculates tax bracket tiers for you, but it’s still important to know for your own financial planning purposes (and to impress your friends, of course 😉).

What is a marginal tax rate?

Your marginal tax rate is the rate you pay on each additional dollar of income. For example, if you’re in the 22% bracket, earning an extra $1,000 means $220 of that will go to taxes.

It’s important to distinguish this from your effective tax rate, which is the average rate you pay across your entire taxable income.

Now that you understand how rates are applied, let’s dive into the new IRS tax brackets so you can find your income tax rate. 

How do you determine your tax bracket?

Determining your tax bracket involves calculating your taxable income, which is your gross income minus deductions and exemptions. Once you have your taxable income, you can compare it to the federal tax brackets for your filing status (single, married filing jointly, married filing separately, head of household).

Steps to determine your tax bracket:

1. Start with gross income: Add up all income sources, such as wages, self-employment income, and investment earnings, to determine your gross income.
2. Subtract deductions: Reduce your gross income by claiming deductions like the standard deduction or itemized deductions.
3. Match your taxable income to a bracket: Locate the bracket range your taxable income falls within to identify your marginal tax rate.

For example, if your taxable income as a single filer is $70,000 in 2025, you fall into the 22% tax bracket. But remember, only the income above $48,375 is taxed at 22%; the rest is taxed at lower rates.

What is your federal effective tax rate?

Your federal effective tax rate is the average percentage of your taxable income that you pay in taxes. Unlike your marginal tax rate, which applies to each additional dollar you earn, the effective tax rate accounts for the progressive nature of tax brackets and provides a clearer picture of your overall tax burden.

How to calculate your effective tax rate:

1. Determine total taxes paid: Add up the total federal income taxes you owe based on the bracket calculations.
2. Divide by taxable income: Divide your total tax by your taxable income, then multiply by 100 to get the percentage.

Back to our example from above:

If your taxable income is $70,000 as a single filer in 2025:

• You pay:
  • 10% on the first $11,925 = $1,192.50
  • 12% on the portion from $11,926 to $48,375 = $4,377
  • 22% on the portion from $48,376 to $70,000 = $4,752.48
• Total taxes owed = $10,321.98
• Effective tax rate = ($10,321.98 ÷ $70,000) × 100 = 14.74%

Your marginal tax rate is 22%, but your effective tax rate is quite a bit lower, giving you a more accurate sense of your overall tax liability.

2025 Federal income tax brackets 

Now that you understand how rates are applied, let’s dive into the new tax brackets for 2025 to see where your income fits.

Single filer

If you file as a single filer, you’re subject to the current federal tax brackets based solely on your own taxable income. This category applies if you’re unmarried and do not qualify for any other filing status, such as head of household.

Tax Rate	Taxable Income Bracket	Tax Owed
10%	$0 – $11,925	10% of taxable income
12%	$11,926 – $48,475	$1,192.50 plus 12% of the amount over $11,925
22%	$48,476 – $103,350	$5,578.50 plus 22% of the amount over $48,475
24%	$103,351 – $197,300	$17,651 plus 24% of the amount over $103,350
32%	$197,301 – $250,525	$40,199 plus 32% of the amount over $197,300
35%	$250,526 – $626,350	$57,231 plus 355 of the amount over $250,525
37%	$626,351 and up	$188,769.75 plus 37% of the amount over $626,350

Married filing jointly

Married couples who file jointly combine their incomes and deductions into one return. This often results in a more favorable tax bracket range compared to filing separately, particularly for couples with significant income differences.

Tax Rate	Taxable Income Bracket	Tax Owed
10%	$0 – $23,850	10% of taxable income
12%	$23,851 – $96,950	$2,384 plus 12% of the amount over $23,850
22%	$96,951 – $206,700	$11,157 plus 22% of the amount over $96,950
24%	$206,701 – $394,600	$35,302 plus 24% of the amount over $206,700
32%	$394,601 – $501,050	$80,398 plus 32% of the amount over $394,600
35%	$501,051 – $751,600	$114,462 plus 35% of the amount over $501,050
37%	$751,601 and up	$202,154.50 plus 37% of the amount over $751,600

Married filing separately

Married couples can choose to file separate tax returns, but this often places each filer into less favorable tax brackets. This status is typically used when one spouse wants to separate their tax liability from the other.

Tax Rate	Taxable Income Bracket	Tax Owed
10%	$0 – $11,925	10% of taxable income
12%	$11,926 – $48,475	$1.192.50 plus 12% of the amount over $11,925
22%	$48,476 – $103,350	$5,578.50 plus 22% of the amount over $48,475
24%	$103,351 – $197,300	$17,651 plus 24% of the amount over $103,350
32%	$197,301 – $250,525	$40,199 plus 32% of the amount over $197,300
35%	$250,526 – $375,800	$57,231 plus 35% of the amount over $250,525
37%	$375,801 and up	$101,077.25 plus 37% of the amount over $375,800

Head of household

This filing status is available to unmarried individuals who provide significant financial support for a dependent, such as a child or aging parent. Head of household filers benefit from wider tax brackets and a larger standard deduction compared to single filers.

Tax Rate	Taxable Income Bracket	Tax Owed
10%	$0 – $17,000	10% of taxable income
12%	$17,001 – $64,850	$1,700 plus 12% of the amount over $17,000
22%	$64,851 – $103,350	$7,442 plus 22% of the amount over $64,850
24%	$103,351 – $197,300	$15,912 plus 24% of the amount over $103,350
32%	$197,301 – $250,500	$38,460 plus 32% of the amount over $197,300
35%	$250,501 – $626,350	$55,484 plus 35% of the amount over $250,500
37%	$626,351 and up	$187,031 plus 37% of the amount over $626,350

2024 Federal income tax brackets 

For comparison, the 2024 tax brackets provide a similar progressive structure, but income ranges are slightly lower, as 2025 was adjusted upward to account for inflation. 

Tax rate	Single filers	Married couples filing jointly	Married couples filing separately	Head of household
10%	$0 – $11,600	$0 – $23,200	$0 – $11,600	$0 – $16,550
12%	$11,601 – $47,150	$23,201 – $94,300	$11,601 – $47,150	$16,551 – $63,100
22%	$47,151 – $100,525	$94,301 – $201,050	$47,151 – $100,525	$63,101 – $100,500
24%	$100,526 – $191,950	$201,051 – $383,900	$100,526 – $191,950	$100,501 – $191,950
32%	$191,951 – $243,725	$383,901 – $487,450	$191,951 – $243,725	$191,951 – $243,700
35%	$243,726 – $609,350	$487,451 – $731,200	$243,726 – $365,600	$243,701 – $609,350
37%	$609,351 and up	$731,201 and up	$365,601 and up	$609,351 and up

How can you lower your tax bracket?

Reducing your taxable income is the key to staying in a lower tax bracket and minimizing what you owe. Here are some potential ways to do that:

Tax deductions: Deductions lower your taxable income. Examples include student loan interest, mortgage interest, and medical expenses.

Tax credits: Tax credits directly reduce your tax bill, dollar for dollar. Common examples include the Child Tax Credit and education credits.

Retirement contributions: Contributions to pre-tax retirement accounts, like 401(k)s or traditional IRAs, reduce your taxable income while helping you save for the future.

Health savings account (HSA): If you have a high-deductible health plan, an HSA allows you to contribute pre-tax dollars for medical expenses, reducing your taxable income further.

Take Control of Your Taxes

Understanding your tax bracket is the foundation for navigating your taxes with confidence. It’s not just about knowing how much you owe — it’s about understanding how the system works so you can make informed decisions. And remember: if you’re unsure at any point or need guidance, it’s best to consult a tax professional.

Once you know your bracket, you can explore opportunities to reduce your taxable income, whether through strategic financial planning or better budgeting for the year ahead. Taking this first step puts you in a stronger position to approach tax season with clarity and purpose — and get further along the road to crushing those financial goals.

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