What is a tax bracket?
The federal government uses a progressive income tax system, which means that a person’s income tax rate increases as their income increases. A tax bracket refers to the range of income that is subject to a particular income tax rate. There are seven federal income tax brackets for tax year 2025. The lowest tax bracket is 10% and the highest tax bracket is 37%.
It is important to note that your highest tax bracket is generally not the tax rate that applies to all of your income. For example, moving from the 22% tax bracket to the 24% tax bracket does not mean that all of your income is now subject to the 24% rate. Only the amount of income that exceeds the maximum for the 22% tax bracket would be taxed at 24% tax.
A common misconception is that earning additional income causes all of your income to be taxed at a higher rate. In reality, only the income that falls within each bracket is taxed at that bracket’s rate.
What are the tax brackets for 2025?
The seven tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Your highest tax bracket depends on your taxable income and your filing status.
The bracket thresholds differ for single filers, heads of household, and married couples filing jointly.
For 2025, the tax brackets are as follows:
- 37% for incomes over $626,350 for individuals or $751,600 for married couples filing jointly.
- 35% for incomes over $250,525 for individuals or $501,050 for married couples filing jointly.
- 32% for incomes over $197,300 for individuals or $394,600 for married couples filing jointly.
- 24% for incomes over $103,350 for individuals or $206,700 for married couples filing jointly.
- 22% for incomes over $48,475 for individuals or $96,950 for married couples filing jointly.
- 12% for incomes over $11,925 for individuals or $23,850 for married couples filing jointly.
- 10% for incomes up to $11,925 for individuals or $23,850 for married couples filing jointly.
It is important to note that individuals filing as heads of household have higher income thresholds than single filers until they reach the 22% tax bracket. At the 24% bracket, the thresholds for heads of household match those for individual filers.
For 2025, the heads of household tax brackets are:
- 37% for incomes over $626,350.
- 35% for incomes over $250,500 but not over $626,350.
- 32% for incomes over $197,300 but not over $250,500.
- 24% for incomes over $103,350 but not over $197,300.
- 22% for incomes over $64,850 but not over $103,350.
- 12% for incomes over $17,000 but not over $64,850.
- 10% for incomes up to $17,000.
As of this writing, the IRS has not yet released the 2026 inflation-adjusted tax brackets.
How do I find out my tax bracket and federal income tax rate?
To determine your income tax bracket, you need to know your taxable income and your filing status. Once you have that information, you can identify which tax brackets apply to you. For tax year 2025, the official information is published in IRS Rev. Proc. 2024-40.
For example, suppose a single taxpayer has $80,000 of taxable income in 2025. According to Rev. Proc. 2024-40:
- The first $11,925 of income is taxed at 10%,
- The next $11,926 to $48,475 is taxed at 12%, and
- The remaining $48,476 to $80,000 is taxed at 22%.
In this case, some income is taxed at 10%, some at 12%, and some at 22%. The tax rate on the last dollar earned—22% in this example—is called the marginal tax rate.
How can I change which tax bracket I am in?
Two main factors affect your highest tax bracket: taxable income and filing status. By lowering your taxable income, you may be able to move into a lower bracket. Strategies include:
- Contributing to pre-tax retirement accounts.
- Contributing to a Health Savings Account (HSA) or Flexible Spending Account (FSA).
- Deducting eligible business expenses.
- Depreciating qualifying business purchases.
- Making charitable donations.
- Claiming available tax deductions or credits.
- Selling stocks at a capital loss.
The right approach depends on your specific situation, so it’s best to consult a tax professional for personalized guidance.
Another way to change your tax bracket is through a change in filing status. Your status changes if you marry, divorce, have a child, or adopt. For instance, a single person with a dependent typically becomes eligible for head of household status. Always review your filing status if your marital situation or dependents change.
The One Big Beautiful Bill Act (OBBBA) and new deductions
The One Big Beautiful Bill Act (OBBBA), passed in the summer of 2025, introduced several provisions designed to reduce taxable income for some taxpayers. Examples include:
- A deduction of up to $25,000 of tip income annually for qualifying occupations (2025–2028).
- A deduction of up to $12,500 ($25,000 for joint filers) of overtime income (2025–2028).
- A deduction of up to $10,000 of car loan interest (2025–2028).
- A new senior deduction of $6,000 ($12,000 for qualifying joint filers) for taxpayers age 65 or older as of the end of the tax year.
Can investing in retirement or my business lower my tax rate or bracket?
Yes. Contributing to pre-tax retirement accounts can reduce your taxable income and potentially lower your marginal tax rate. This means less of your income falls into higher brackets. However, note that Roth IRA contributions do not reduce taxable income because they are made with after-tax dollars.
Investing in your business can also reduce taxable income in some cases—particularly when expenses are immediately deductible. However, many investments must be depreciated over time and may not lower taxable income in the year they’re made. Thoughtful tax planning can help business owners maximize deductions and minimize tax liability.
If you have more questions about how to lower your taxable income or tax planning, reach out to a Rocket Legal Pro for personalized and affordable legal help.
Please note: This page offers general legal information, not but not legal advice tailored for your specific legal situation. Rocket Lawyer Incorporated isn't a law firm or a substitute for one. For further information on this topic, you can Ask a Legal Pro.
