The IRS uses seven tax brackets to calculate your tax bill based on income and filing status. As your income rises, you may move into a higher tax bracket, which can increase the amount you owe in taxes.
It’s important to note that you do not pay the same tax rate on every dollar of income. Instead, your income is divided into thresholds. As you exceed each threshold, a portion of your income is taxed at the higher rate associated with the new bracket.
Your marginal tax rate is the rate applied to your highest dollar of income, while your effective tax rate is the total percentage of your income that you pay in taxes.
For example, assume a hypothetical taxpayer who is married and has $100,000 of joint income in 2024 is claiming the standard deduction of $29,200.
Without considering other income, adjustments to income, or other deductions, their taxable income would be $70,800. That is $100,000 joint income minus $29,200 for the standard deduction. They would owe the following in federal income taxes:
10% of the first $23,200 income is $2,320 tax.
12% of the next portion of $71,100 and up to $94,300 is $8,532 tax.
22% of the remaining portion of $5,700 and up to $201,050 is $1,254.
Add $2,320 plus $8,532 plus $1,254, they owe $11,926 of total taxes on $100,000 of income.
Their effective tax rate is then $11,926 divided by $100,000 comes to 11.9%.
The Internal Revenue Service adjusts federal income tax brackets each year for inflation. Below are the 2025 tax brackets to help estimate your tax obligation based on income and filing status.
Notice, that for married couples filing jointly, the standard deduction rises to $30,000 in 2025, an increase of $800 from tax year 2024.