Tax bracket

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The United States tax system is a progressive tax system, which means that the taxation progressively increases as a taxpayer’s income grows. The tax rate for a certain range of income is a tax bracket. Low incomes fall into the tax brackets with lower tax rates, while the higher incomes fall into brackets with higher tax rates.

There are currently seven federal tax brackets in the United States, ranging from 10% to 37%. Single filers who have less than $9,875 in taxable income are subject to the 10% income tax rate, which is the lowest bracket. Every dollar the taxpayer earned more than $9,875 would be taxed at 12%, which is the next bracket. Earnings between $40,125 and $85,525 would be taxed at 22%, the third bracket. Earnings between $85,526 and $163,300 would be taxed at 24%, the fourth bracket. The fifth bracket is taxed at 32% for earnings between $163,301 to $207,350. The sixth bracket is taxed at 35% for earnings between $207,351 to $518,400. And the last bracket is taxed at 37% for any earnings higher than $518,400.

[Last updated in April of 2021 by the Wex Definitions Team]