Your tax rate depends on your income, filing status, and the type of tax
Your tax rate is the percentage of your income that goes to federal, state, or local taxes. The rate you pay is not the same for everyone — it changes based on how much you earn, whether you file as single or married, and which tax you are paying. The federal government uses a progressive tax system, which means higher earners pay a higher percentage, but the rate only applies to income in that bracket, not all your income.
Most people think of one tax rate, but you actually have two: your marginal rate (the percentage on your last dollar earned) and your effective rate (the average percentage you pay on all your income). Your effective rate is always lower than your marginal rate because the progressive system taxes different portions of your income at different rates.
Key Takeaways
- Federal tax brackets for 2024 range from 10% to 37%, and your rate depends on your total income and filing status, not your job title or industry.
- Your effective tax rate (what you actually pay on average) is lower than your marginal rate (the rate on your last dollar earned).
- State and local income taxes vary widely — some states have no income tax, while others tax up to 13% or more.
- You can find your federal tax bracket using the IRS tax tables or a tax bracket calculator, which require your filing status and total income.
- Your W-4 form at work controls how much tax is withheld from each paycheck, not your actual tax rate.
Federal tax brackets for 2024
The IRS publishes tax brackets every year. For 2024, there are seven federal tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Which bracket you fall into depends on your filing status (single, married filing jointly, married filing separately, or head of household) and your total taxable income for the year.
Here is how it works: if you are single and earned $50,000 in 2024, you do not pay 22% on all $50,000. Instead, you pay 10% on the first portion, 12% on the next portion, and 22% only on the amount above a certain threshold. That threshold changes each year and differs by filing status. The IRS website and most tax software show these thresholds in their tax tables.
To find your bracket, you need to know your total income for the year (wages, self-employment income, investment income, and other sources combined) and your filing status. Once you have those two pieces of information, you can look up your bracket in the IRS tax tables or use an online tax bracket calculator.
State and local income tax rates
Nine states have no state income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only investment income). The remaining 41 states and Washington, D.C. charge income tax, and the rates vary widely.
Some states use a flat tax rate — everyone pays the same percentage regardless of income. Others use progressive brackets similar to the federal system. State rates range from about 1% to over 13%, depending on the state and your income level. You can find your state's rate on your state revenue or taxation department website.
Many cities and counties also charge local income tax on top of state tax. This is common in Ohio, Pennsylvania, Kentucky, and some cities in other states. Local rates are usually small — often under 2% — but they add to your total tax burden. Your employer should withhold local tax from your paycheck if you live in a locality that charges it.
The difference between marginal and effective tax rate
Your marginal tax rate is the percentage you pay on your last dollar of income. If you are single and earned $50,000, your marginal rate is 22% because that is the bracket your $50,000 falls into. But you did not pay 22% on all $50,000.
Your effective tax rate is the total federal income tax you owe divided by your total income. If you owe $6,000 in federal tax on $50,000 of income, your effective rate is 12% ($6,000 ÷ $50,000). This is why your effective rate is always lower than your marginal rate — you pay lower percentages on the income in the lower brackets.
Understanding this matters because it corrects a common misconception: earning more money does not push you into a higher tax bracket in a way that makes you worse off. Moving into a higher bracket only means the income above the threshold is taxed at the higher rate. The income below the threshold stays taxed at the lower rate.
How to calculate your effective tax rate
To find your effective tax rate, you need two numbers: your total federal income tax for the year and your total taxable income. Your tax return (Form 1040) shows both of these.
The formula is simple: divide your total tax by your total income, then multiply by 100 to get a percentage. For example, if your total federal tax is $8,500 and your total income is $75,000, your effective rate is 11.3% ($8,500 ÷ $75,000 × 100 = 11.3%).
You can also estimate your effective rate before filing using tax software or a tax calculator. These tools ask for your income and filing status, then show you an estimated tax amount. Divide that by your income to get your estimated effective rate. Keep in mind this is an estimate — your actual rate may differ depending on deductions, credits, and other factors.
Why your W-4 withholding is not the same as your tax rate
Many people confuse their W-4 withholding with their tax rate. Your W-4 is a form you fill out when you start a job that tells your employer how much tax to take out of each paycheck. It is not your actual tax rate — it is just a tool to estimate and spread your annual tax across 26 paychecks.
If you claim zero allowances on your W-4, your employer withholds more from each paycheck. If you claim more allowances, your employer withholds less. Neither of these changes your actual tax rate or how much tax you owe for the year. They only change how much is taken out during the year. When you file your tax return, the IRS calculates what you actually owe based on your income and filing status, then credits you for what was already withheld.
If too much was withheld, you get a refund. If too little was withheld, you owe money. Your actual tax rate is determined by law and your income, not by what you put on your W-4.
Self-employment tax rate
If you are self-employed, you pay self-employment tax in addition to income tax. Self-employment tax covers Social Security and Medicare and is currently 15.3% of your net self-employment income (12.4% for Social Security and 2.9% for Medicare). You can deduct half of this tax from your income before calculating income tax.
Self-employed people pay both the employer and employee portions of these taxes, whereas employees have their employer pay half. This is why self-employment tax is higher than the Medicare and Social Security taxes withheld from a regular paycheck.
To calculate your self-employment tax, you use Schedule SE (Form 1040). Your net self-employment income is your business income minus business expenses. Once you know that number, you apply the 15.3% rate to find what you owe.
Frequently Asked Questions
What is the difference between tax bracket and tax rate?
A tax bracket is a range of income that is taxed at a specific rate. A tax rate is the percentage applied to that income. You can be in the 24% tax bracket but have an effective tax rate of 15% because you also have income taxed at lower rates in lower brackets.
Do I pay the same tax rate on all my income?
No. The federal system taxes different portions of your income at different rates. Only the income that falls within a specific bracket is taxed at that bracket's rate. This is why the effective rate (average) is lower than the marginal rate (the highest bracket you reach).
How do I know if I am withholding too much or too little?
Look at your last paycheck stub and your expected annual income. If you are getting a large refund each year, you are likely withholding too much. If you owe money at tax time, you are withholding too little. You can adjust your W-4 with your employer to change your withholding.
Does my tax rate change if I get a raise?
Your marginal rate may change if a raise pushes you into a higher bracket, but only the income above the bracket threshold is taxed at the new rate. Your effective rate will increase slightly, but not as much as your income increased. You do not lose money by earning more.
What states have no income tax?
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire have no state income tax. New Hampshire taxes only investment income, not wages. These states often make up the lost revenue through sales tax or other taxes.