Federal income tax rates are set by Congress and change based on how much you earn
The federal government taxes your income using a progressive tax system. This means you do not pay one flat rate on all your money. Instead, your income is divided into chunks, and each chunk is taxed at a different rate. The rates themselves — called tax brackets — are set by law and adjusted each year for inflation. For 2024, there are seven federal tax brackets ranging from 10% to 37%.
The key thing to understand: you do not pay the top rate on all your income. If you are in the 24% bracket, that does not mean you pay 24% on every dollar. It means the last portion of your income — the portion that falls into that bracket — is taxed at 24%. Everything below that is taxed at lower rates.
Your filing status matters. A single person, a married couple filing jointly, and a head of household all have different income ranges for each bracket. A married couple filing jointly can earn more before hitting a higher bracket than a single person can.
Key Takeaways
- Federal tax brackets for 2024 range from 10% to 37%, and the rate you pay depends on how much you earn and your filing status.
- You pay different rates on different portions of your income — the lowest rates apply to your first dollars earned, and higher rates apply only to income above certain thresholds.
- The income ranges for each bracket shift every year based on inflation, so the same dollar amount does not always fall into the same bracket year to year.
- Your filing status (single, married filing jointly, head of household, or married filing separately) determines which income threshold applies to you.
- The tax rate you see on your W-2 or tax return is your effective rate — the average rate you paid on all your income, which is lower than your top bracket rate.
The seven federal tax brackets and 2024 income ranges
Congress sets seven tax brackets. The income ranges for each bracket depend on your filing status. Below are the 2024 ranges. These numbers change annually.
| Tax Rate | Single Filer | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $17,400 |
| 12% | $11,600 to $47,150 | $23,200 to $94,300 | $17,400 to $66,550 |
| 22% | $47,150 to $100,525 | $94,300 to $201,050 | $66,550 to $100,525 |
| 24% | $100,525 to $191,950 | $201,050 to $383,900 | $100,525 to $191,950 |
| 32% | $191,950 to $243,725 | $383,900 to $487,450 | $191,950 to $243,700 |
| 35% | $243,725 to $609,350 | $487,450 to $731,200 | $243,700 to $609,350 |
| 37% | $609,350 and above | $731,200 and above | $609,350 and above |
These ranges are for the 2024 tax year, which you will report on your 2024 tax return filed in 2025. The IRS adjusts these numbers each year, usually in October or November of the prior year.
How the bracket system actually works with an example
Say you are single and earned $60,000 in 2024. You do not pay 22% on all $60,000. Instead, your income is taxed in layers:
- The first $11,600 is taxed at 10%: $1,160
- The next $35,550 (from $11,600 to $47,150) is taxed at 12%: $4,266
- The remaining $12,850 (from $47,150 to $60,000) is taxed at 22%: $2,827
Your total federal tax is $8,253. Your effective tax rate — the average rate you paid across all your income — is about 13.8%, not 22%. This is why your effective rate is always lower than your top bracket rate.
If you earned $50,000 instead, you would not reach the 22% bracket at all. Your income would be taxed only at 10% and 12%, and your effective rate would be lower still.
Why brackets change every year
The IRS adjusts tax brackets annually for inflation. This means the income thresholds shift up each year, usually by a small percentage. In recent years, inflation has been higher, so the adjustments have been larger.
The reason: Congress does not want inflation to push you into a higher bracket without your income actually increasing in real terms. If brackets never changed, someone earning the same amount in purchasing power would pay a higher rate each year just because of inflation. The annual adjustment prevents that.
You can find the current year's brackets on the IRS website (irs.gov) each fall, before tax season begins. Tax software and your employer's payroll system use the current brackets automatically.
Standard deduction and how it affects your taxable income
Before the tax brackets apply, you subtract the standard deduction from your income. This is a set amount that reduces the income you actually pay tax on. For 2024, the standard deduction is $14,600 for a single filer, $29,200 for married filing jointly, and $21,900 for head of household.
Using the earlier example: if you earned $60,000 as a single filer, you would subtract $14,600, leaving $45,400 in taxable income. That $45,400 is what gets divided into the tax brackets, not the full $60,000. This is why your actual tax bill is lower than it would be if brackets applied to your gross income.
The standard deduction also changes each year for inflation. Some people instead itemize deductions — listing specific expenses like mortgage interest or charitable donations — if those add up to more than the standard deduction. Most people use the standard deduction because it is simpler and often larger.
Capital gains and investment income have different rates
The brackets described above apply to ordinary income — wages, salary, self-employment income, and most other sources. Long-term capital gains (profits from selling investments you held more than one year) and may have access to dividends are taxed at different, usually lower rates.
Long-term capital gains have their own three brackets: 0%, 15%, and 20%. These thresholds are different from the ordinary income brackets. A person in the 37% ordinary income bracket might pay only 20% on long-term capital gains.
Short-term capital gains (from selling investments held one year or less) are taxed as ordinary income at your regular bracket rate. This is one reason investors often hold investments longer than a year.
What your W-2 and paycheck withholding show
Your employer withholds federal income tax from each paycheck based on the tax brackets and your W-4 form. The amount withheld is an estimate meant to roughly match what you will owe when you file your tax return.
The withholding is not exact. If you have multiple jobs, significant investment income, or large deductions, your withholding might be too high or too low. Too high means you get a refund when you file. Too low means you owe money. You can adjust your withholding by filing a new W-4 with your employer.
Your pay stub shows your gross income, the federal tax withheld, and your net pay. The federal tax withheld is based on your bracket and filing status, but it is not the same as your final tax bill — that is calculated when you file your return and account for all your income, deductions, and credits for the year.
Frequently Asked Questions
If I earn more money, will I pay more in taxes on all my income?
No. When you earn more and move into a higher bracket, only the income in that new bracket is taxed at the higher rate. The income you already earned stays taxed at the lower rates. Your effective tax rate goes up, but not dramatically. Earning more money always leaves you with more after-tax income.
Do tax brackets change if I get married or have children?
Your filing status changes if you marry, and that changes which bracket ranges apply to you — married filing jointly has wider brackets than single. Having children does not change your bracket, but you may be able to claim tax credits (like the Child Tax Credit) that reduce your tax bill. Credits are different from brackets.
Why is my effective tax rate so much lower than my top bracket?
Because only the income in your top bracket is taxed at that rate. All your income below that is taxed at lower rates. If you are in the 24% bracket, most of your income is taxed at 10%, 12%, or 22%. Only the last portion hits 24%. That is why your average rate across all income is much lower.
Do state and local taxes use the same brackets as federal?
No. Each state sets its own tax brackets, rates, and rules. Some states have no income tax. Others have flat rates or different bracket structures than the federal system. Your state tax is calculated separately from your federal tax, and both appear on your tax return.
When do the 2025 tax brackets come out?
The IRS typically releases the next year's brackets in October or November. For the 2025 tax year (filed in 2026), the brackets will be announced in fall 2025. Tax software and payroll systems update automatically once the IRS announces the new numbers.