How Progressive Tax Brackets Work
The US uses a progressive tax system: your income is divided into ranges (brackets), and each range is taxed at a different rate. You don't pay your top rate on all income — only on the portion that falls within that bracket. For example, a Single filer earning $100,000 in 2025 pays 10% on the first $11,925, 12% on $11,925–$48,475, and 22% on $48,475–$100,000 (after the standard deduction).
Marginal vs. Effective Rate
Your marginal rate is the percentage applied to your last dollar of taxable income — it determines the tax impact of additional earnings. Your effective rate is your total tax divided by total income, reflecting the average rate across all brackets. The effective rate is always lower than the marginal rate because of the progressive structure.