Tax Bracket
A range of taxable income subject to a specific marginal tax rate under the federal progressive income tax system.
Detailed Explanation
For 2025, federal individual income tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with thresholds varying by filing status. Brackets are marginal: only income above each threshold is taxed at that bracket's rate. Effective tax rate (total tax divided by taxable income) is always lower than the top marginal rate. Brackets are adjusted annually for inflation. Long-term capital gains and qualified dividends use a separate three-bracket structure (0%, 15%, 20%).
Key Points
- Seven ordinary brackets for 2025: 10%, 12%, 22%, 24%, 32%, 35%, 37%.
- Brackets are marginal: only the income within each band is taxed at that band's rate.
- Your effective rate (total tax / taxable income) is always below your top marginal rate.
- Long-term capital gains and qualified dividends use a separate 0% / 15% / 20% structure.
- Thresholds are indexed for inflation each year and vary by filing status.
Practical Example
A single filer with $60,000 of taxable income in 2025 does not pay 22% on all of it. The first portion is taxed at 10%, the next at 12%, and only the income above the 22% threshold is taxed at 22%. The blended (effective) rate works out to roughly 13%, far below the 22% top marginal bracket.
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Learn about Tax Planning & StrategyRelated Terms
Adjusted Gross Income (AGI)
Adjusted Gross Income is your total gross income reduced by specific above-the-line deductions, used as the starting point for calculating your federal taxable income.
Form 1040 (US Individual Income Tax Return)
The annual federal income tax return filed by US citizens and resident aliens to report income, deductions, credits, and tax liability.
Capital Gain
The profit realized from the sale of a capital asset such as stock, real estate, or cryptocurrency, taxed at preferential rates if held longer than one year.
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