Tax Bracket
An income range taxed at a particular rate — only the income inside that range is taxed at it, not your whole salary.
What Tax Bracket means
The US uses a progressive, marginal system. Income is divided into bands, and each band is taxed at its own rate. Being "in the 24% bracket" means the last dollars you earned were taxed at 24% — not that all your income was.
This is the most widely misunderstood point in personal taxes. A raise that pushes you into a higher bracket never reduces your take-home pay; only the portion above the threshold is taxed at the higher rate.
Your effective tax rate — total tax divided by total income — is therefore always lower than your marginal rate.
The distinction is practical. Marginal rate is what matters for decisions at the margin: whether a traditional or Roth contribution is better, what a bonus will actually net, what a deduction is worth. Effective rate is what matters for budgeting.
Example
In practice: A single filer with $60,000 of taxable income pays 10% on the first band, 12% on the next, and 22% only on the portion above that threshold — an effective rate well under 22%.
Related terms
Withholding
The income tax your employer deducts from each paycheck and sends to the government on your behalf during the year.
Capital Gains
The profit from selling an asset for more than you paid, taxed at a lower rate if you held it longer than a year.
Roth IRA
A retirement account funded with after-tax dollars where qualified withdrawals, including all growth, come out tax-free.
Traditional IRA
A retirement account where contributions may be tax-deductible now and withdrawals are taxed as ordinary income later.
401(k)
An employer-sponsored retirement account that lets you invest part of your paycheck before taxes, often with a matching contribution.
Run the numbers
Income Tax Calculator (Federal Brackets)
Estimate your U.S. federal income tax, marginal and effective rates, and take-home pay — with a bracket-by-bracket breakdown of how your income is taxed.
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