How marginal tax brackets work
The US federal income tax system uses progressive marginal brackets. Each bracket applies its rate only to income within that range, not to your entire income. Moving into a higher bracket does not retroactively increase the rate on income already taxed at lower rates.
For 2025, a single filer with 59,250 of taxable income pays 10% on the first 11,925, 12% on the next layer up to 48,475, and 22% on the remaining amount above 48,475. The total tax is the sum of each bracket contribution, and the effective rate is that total divided by gross income.
Taxable income = Gross income - Deduction applied
Subtract the standard deduction or your custom deduction amount from gross income to find the amount subject to federal tax.
Effective rate = (Total tax / Gross income) x 100
The effective tax rate is the overall percentage of gross income paid in federal income tax, typically lower than the marginal rate.