Tax Bracket Basics

May 7th 2016

Progressive taxation systems that tax individuals based on increases in income are used within the United States. To determine their respective tax brackets, people can ask a tax professional or contact the Internal Revenue Service.

How Are Tax Brackets Established?

The Internal Revenue Service announces tax bracket figures and schedules based on annual inflation and cost-of-living adjustments. Tax brackets may fluctuate over time to adjust for changes within the economy and employment rates. Individuals, families and businesses are taxed based on their income levels, with those at lower income levels taxed at a lower rate than those at higher levels. The tax brackets issued by the IRS feature a cut-off income amount for each bracket. If the income exceeds a bracket, the filer is taxed based on the rate of the next bracket.

What Are the Tax Rates for Lower Incomes?

Tax rates vary by the filing status. For example, individuals who earned $9,225 or less during the 2014 tax year were taxed at 10 percent, whereas married individuals filing joint returns were taxed at 10 percent with an annual income of up to $18,450. Individuals filing as head of household were taxed at 10 percent if they had an income of $13,150 or less.

What Are The Tax Rates For Higher Incomes?

Tax rates increase as income and profits increase. For the 2014 tax year, the IRS stipulated that individuals who earned more than $413,201 were taxed approximately $119,000 plus 36 percent of income over $413,201. Tax rates in 2014 ranged from 10 percent to 36 percent for people filing as single.


A tax bracket determines how much an individual or business is taxed on net profit or income. When filing taxes, individuals who earn more than others may be subject to higher tax rates. This is often referred to as progressive taxation. The tax bracket system differs significantly from a flat tax structure in which all filers are taxed at the same rate regardless of their level of income.

More in category

Related Content