A tax rate is the percentage at which someone is taxed. Federal income tax rates are progressive, meaning that as someone’s taxable income increases, their tax rate also increases.
How is someone’s tax rate determined?
A tax rate is applied to a taxpayer based on their
A person’s filing status depends on a number of factors, including marital status as of December 31, the last day of the tax year.
A person's income level will determine their "taxable income bracket." That's the range of income dollars their income falls in. Each range has a different tax rate.
What are the different tax rates, and who sets them?
The federal government has defined 7 tax rates for taxpayers that increase as income increases. The rates range from 10% to 37%. The rate each person gets depends on their tax bracket, or the pre-defined range of dollars their income falls in. Tax brackets are adjusted annually for inflation.
Is all taxable income treated in the same way?
No, a separate schedule of tax rates applies to capital gains and dividends.