Overview
Federal income tax brackets affect how much of your paycheck you actually keep, yet they’re one of the most misunderstood parts of the tax system. Many people talk about an increase in income “pushing them into a higher tax bracket,” as if they’ll pay taxes on all their income at a higher tax rate. This misconception can make raises, bonuses, or a side hustle feel like a mixed bag.
The reality is more nuanced and far more predictable once you understand how tax brackets work. They follow a layered structure that make it possible to estimate your tax bill with reasonable accuracy.
As you prepare to file your federal income tax return, take a few minutes to understand how federal income tax brackets and rates work. It can help you make better decisions throughout the year, not just at filing time.
What Are Federal Income Tax Brackets?
Tax brackets are ranges of income taxed at different rates. The US uses a progressive tax system, meaning it taxes higher levels of income at higher rates. A tax rate is the percentage of income you pay on income within a specific bracket.
You might hear someone say, “I’m in the 24 percent tax bracket.” But that doesn’t mean that rate applies to all their income. It simply means the top portion of their income falls into that bracket.
The key to understanding is that the IRS divides your income across tax brackets; it’s not taxed at one flat rate.
Here are the federal income tax brackets for the 2025 and 2026 tax years.
2025 federal income tax brackets
These brackets and rates apply to taxable income earned in 2025.
| Tax rate | Single | Married filing jointly and surviving spouse | Head of household | Married filing separately |
| 10 percent | $0 to $11,925 | $0 to $23,850 | $0 to $17,000 | $0 to $11,925 |
| 12 percent | $11,926 to $48,475 | $23,851 to $96,950 | $17,001 to $64,850 | $11,925 to $48,475 |
| 22 percent | $48,476 to $103,350 | $96,951 to $206,700 | $64,851 to $103,350 | $48,476 to $103,350 |
| 24 percent | $103,351 to $197,300 | $206,701 to $394,600 | $103,351 to $197,300 | $103,351 to $197,300 |
| 32 percent | $197,301 to $250,525 | $394,601 to $501,050 | $197,301 to $250,500 | $197,301 to $250,525 |
| 35 percent | $250,526 to $626,350 | $501,051 to $751,600 | $250,501 to $626,350 | $250,526 to $375,800 |
| 37 percent | $626,351 or more | $751,601 or more | $626,351 or more | $375,801 or more |
2026 federal income tax brackets
Each year, the IRS adjusts bracket thresholds to account for inflation. These adjustments help prevent “bracket creep,” where inflation alone pushes you into higher tax brackets even if your actual purchasing power hasn’t increased.
The tax rates stay the same, assuming Congress doesn’t change them. But the income ranges that apply to each rate shift slightly.
Here are the brackets and rates that apply to taxable income earned in 2026.
| Tax rate | Single | Married filing jointly and surviving spouse | Head of household | Married filing separately |
| 10 percent | $0 to $12,400 | $0 to $24,800 | $0 to $17,700 | $0 to $12,400 |
| 12 percent | $12,401 to $50,400 | $24,801 to $100,800 | $17,701 to $67,450 | $12,401 to $50,400 |
| 22 percent | $50,401 to $105,700 | $100,801 to $211,400 | $67,451 to $105,700 | $50,401 to $105,700 |
| 24 percent | $105,701 to $201,775 | $211,401 to $403,550 | $105,701 to $201,750 | $105,701 to $201,775 |
| 32 percent | $201,776 to $256,225 | $403,551 to $512,450 | $201,751 to $256,200 | $201,776 to $256,225 |
| 35 percent | $256,226 to $640,600 | $512,451 to $768,700 | $256,201 to $640,600 | $256,226 to $384,351 |
| 37 percent | $640,601 or more | $768,701 or more | $640,601 or more | $384,351 or more |
How Tax Brackets Work
This is where a lot of confusion stems from, so let’s break it down with a simple example.
Imagine you’re a single filer and your 2025 taxable income, after claiming available deductions, is $150,000. That puts you in the 24 percent tax bracket, but your tax bill isn’t $150,000 multiplied by 24 percent, which would be $36,000.
Here’s a rough calculation of your 2025 federal income tax bill:
10 percent on the first $11,925 of income: $1,192.50
12 percent on the next $36,550 of income: $4,386.00
22 percent on the next $54,875 of income: $12,072.50
24 percent on the next $46,650 of income: $11,196.00
So you would owe $28,847 in federal income taxes for 2025.
Even if you get a raise or a bonus that pushes you into a higher tax bracket, your earlier dollars are still taxed at lower rates. This layered approach is why moving into a higher tax bracket doesn’t mean you suddenly take home less money overall.
Marginal Tax Rate vs. Effective Tax Rate
Two terms you might hear when talking about tax rates are marginal tax rate and effective tax rate.
Your marginal tax rate is the rate that applies to your last dollar of income. Returning to the example above, your marginal tax rate is 24 percent.
Your effective rate is the average you pay across all of your taxable income. Returning to the example above, your effective tax rate is 19 percent. That’s the tax you owe ($28,847) divided by your total taxable income ($150,000).
Your effective tax rate is almost always lower than your marginal tax rate because much of your income is taxed at a lower tax bracket.
Tips to Reduce Your Taxable Income
One important thing to keep in mind is that you don’t pay federal income taxes on your gross income. You pay tax on your taxable income, which is what’s left after applying deductions.
Here are a few potential deductions that can lower your taxable income.
Claim the standard deduction…
When you file your federal income tax return, you get to choose between itemizing deductions or claiming the standard deduction. Typically, you’ll choose the option that results in the lowest tax liability.
Itemized deductions are specific, eligible expenses you track throughout the year, while the standard deduction is a fixed amount set by the IRS each year.
For the 2025 tax year (tax returns filed in 2026), the standard deduction for each filing status is:
Single and married filing separately: $15,000
Married filing jointly and surviving spouse: $30,000
Head of household: $22,500
According to IRS statistics, nearly 90 percent of taxpayers claim the standard deduction rather than itemizing.
Or claim itemized deductions
Itemized deductions are specific expenses you can deduct to lower your taxable income. Itemizing requires you to track and document all qualifying expenses throughout the year. This is more work, but it’s beneficial if your total itemized expenses are greater than the standard deduction available for your filing status.
Some common itemized deductions include:
Out-of-pocket medical and dental expenses. You can only deduct the unreimbursed expenses that exceed 7.5 percent of your adjusted gross income (AGI).
Mortgage interest. You can deduct the interest you paid on your primary home and one vacation home. The deduction is limited to interest on $750,000 of debt for loans taken out after December 15, 2017. For mortgages taken out on or before that date, the limit is $1 million.
State and local taxes. You can deduct property taxes as well as state and local income or sales taxes, up to a combined total of $40,000 ($20,000 if married filing separately). That maximum deduction is reduced if your modified adjusted gross income is over $500,000 ($250,000 if married filing separately).
Gifts to charity. You can deduct gifts of cash or property made to qualified charitable organizations.
Contribute to retirement accounts
Contributions to a traditional IRA, 401(k), 403(b), or governmental 457 plan can reduce your taxable income in the year you make them.
For 2025, you can contribute up to $7,000 to a traditional IRA ($8,000 if you’re age 50 or older). If you have access to a 401(k), 403(b), or 457 plan at work, you can contribute up to $23,500.
Employees age 50 or older can make additional “catch-up” contributions. That amount is $7,500 for most participants. However, a higher catch-up limit applies to participants aged 60 through 63. For 2025, the higher catch-up limit is $11,250 for that age group.
Contribute to a health savings account
If you’re enrolled in a high deductible health plan (HDHP), you can set aside money in a health savings account (HSA) to pay for out-of-pocket medical expenses. Contributions to an HSA are tax-deductible, the money in the account grows tax-free, and withdrawals from an HSA are tax free as long as you use them for qualified healthcare expenses.
For the 2025 tax year, you can contribute up to $4,300 for a self-only HSA or $8,550 for family coverage.
Deduct student loan interest
You may be able to deduct the interest you paid on student loans. The maximum deduction is $2,500. However, the deduction phases out if your MAGI is $85,000 or more ($170,000 or more for joint filers).
Self-employed business expenses
If you’re self-employed or an independent contractor, you can deduct ordinary and necessary business expenses. Eligible expenses vary from business to business, but some common ones include:
Advertising and marketing costs
Business insurance
Depreciation
Home office expenses
Legal and professional fees
Rent
Supplies
Taxes and licenses
Travel expenses
Utilities
Putting Tax Brackets to Work for You
Understanding how federal income tax brackets and rates work isn’t just background knowledge. It gives you options. Because the IRS taxes your income in layers, when you earn income and when you claim deductions can affect how much tax you end up paying.
For example, you might be able to accelerate deductions by pre-paying next year’s state income taxes or property taxes to lower your taxable income this year. Also, many tax deductions and tax credits are based on your AGI or MAGI. So lowering those numbers with deductions can help you qualify for additional tax breaks that might otherwise be out of reach.
If you’re unsure how these strategies apply to your situation, reach out to a qualified tax professional. They can help you plan ahead and avoid paying more than you need to.
by your friends at The Daily Navigator
