How Federal Income Tax Brackets Actually Work

Moving into a higher tax bracket never lowers your take-home pay. US federal income tax is marginal: each bracket's rate applies only to the dollars that fall inside that bracket, not to your entire income. Internalize that one fact and the rest of the system stops being intimidating.

Marginal vs. effective rate

Your marginal rate is the rate on your next dollar earned — the bracket your top dollar lands in. Your effective rate is the total tax you owe divided by your total income. The effective rate is always lower than the marginal rate, because the early dollars of your income are taxed in the lower brackets first.

When someone says they are 'in the 22% bracket,' they mean their marginal rate is 22%. They are not paying 22% of everything they earn. Their effective rate might be closer to 12-14%.

The 2025 federal brackets

For the 2025 tax year there are seven rates — 10%, 12%, 22%, 24%, 32%, 35%, and 37% — and the dollar ranges they apply to depend on your filing status (single, married filing jointly, or head of household). Before any of them apply, the standard deduction removes a chunk of income from tax entirely: for 2025 that is $15,750 for single filers and $31,500 for married couples filing jointly.

A worked example

Suppose a single filer has $70,000 of taxable income (after the standard deduction). The first slice is taxed at 10%, the next at 12%, and only the portion above the 22% threshold is taxed at 22%. Add the three pieces together and the total is far less than 22% of $70,000 — that blended figure is the effective rate.

1. Subtract the standard deduction (or your itemized deductions) from gross income to get taxable income.
2. Apply each bracket's rate to only the income that falls within that bracket.
3. Sum the per-bracket amounts to get total federal income tax.
4. Divide that total by gross income for your effective rate.

Why the 'a raise pushed me into a higher bracket' fear is wrong

A raise only taxes the new dollars at the higher rate; every dollar you already earned keeps its old, lower treatment. A $5,000 raise that pushes your top dollars into the 22% bracket costs you at most 22% of that $5,000 in federal income tax — you still keep the rest. Run the before-and-after with the pay raise calculator to see the real net gain.

What brackets do not include

Federal income tax is only one line on your paycheck. Social Security and Medicare (FICA) are separate flat taxes, and most states levy their own income tax on top. To see everything withheld from an actual paycheck, use the take-home pay calculator rather than the income-tax figure alone.