How Tax Brackets Work
The US uses progressive taxation. Income is divided into brackets, each taxed at increasing rates.
2024 Federal Tax Brackets (Single)
- 10% on income up to $11,600
- 12% on $11,601 to $47,150
- 22% on $47,151 to $100,525
- 24% on $100,526 to $191,950
- 32% on $191,951 to $243,725
- 35% on $243,726 to $609,350
- 37% on income over $609,350
Marginal vs Effective Rate
If you earn $60,000:
- Marginal rate: 22% (your top bracket)
- Effective rate: ~13% (actual tax ÷ income)
Reducing Your Tax Bill
- Contribute to 401(k): Reduces taxable income
- HSA contributions: Triple tax advantage
- Itemize deductions: If higher than standard deduction
- Tax-loss harvesting: Offset gains with losses