Tax Brackets

« Back to Glossary Index

Tax brackets refer to the different income ranges that determine the amount of income tax an individual or household owes to the government. The United States and many other countries use a progressive tax system, which means that as income increases, the tax rate also increases.

In a progressive tax system, tax brackets are used to determine the tax rate for each level of income. Tax brackets are typically divided into several tiers, with each tier representing a different range of income and corresponding tax rate.

As an individual or household’s income increases, they move up into higher tax brackets and pay a higher percentage of their income in taxes. Tax brackets can change over time due to changes in tax laws, inflation, and other economic factors.

It is important to understand how tax brackets work and to accurately calculate tax liability based on the appropriate tax bracket for one’s income level.

« Back to Glossary Index