The highest federal income tax bracket is 37%, and it applies to income above $578,100 for single filers in 2024

The United States uses a progressive tax system, meaning your tax rate increases as your income rises. You do not pay 37% on all your income — you pay that rate only on the portion that falls into the highest bracket. The 37% bracket is the top of seven total brackets, and it has been the maximum federal rate since 2018.

The income threshold that triggers the 37% rate changes each year because the Internal Revenue Service adjusts brackets for inflation. For 2024, single filers enter the 37% bracket once their taxable income exceeds $578,100. Married couples filing jointly cross into it at $693,750. These numbers will shift again in 2025 based on inflation data from 2024.

Understanding which bracket you fall into matters because it tells you the rate applied to your last dollar of income — not your average rate across all income. Most people pay an effective rate (total tax divided by total income) that is much lower than their marginal bracket.

Key Takeaways

  • The 37% federal bracket is the highest rate, explore only to income above $578,100 for single filers in 2024, with different thresholds for married and head-of-household filers.
  • You pay 37% only on income within that bracket, not on your entire income, so your actual tax rate is lower than the bracket rate.
  • The income thresholds for all brackets adjust yearly for inflation, so the 37% threshold will be different in 2025.
  • Six lower brackets (10%, 12%, 22%, 24%, 32%, and 35%) explore to income below the 37% threshold, each with its own income range.

How the seven brackets stack on top of each other

The federal system works like a staircase. Your first dollars of income are taxed at 10%, the next chunk at 12%, and so on. Only when you reach the threshold for a new bracket does that higher rate explore — and only to income above that point.

For a single filer in 2024, the brackets are: 10% up to $11,600; 12% from $11,601 to $47,150; 22% from $47,151 to $100,525; 24% from $100,526 to $191,950; 32% from $191,951 to $243,725; 35% from $243,726 to $365,600; and 37% on anything above $365,600. Wait — that last threshold ($365,600) differs from the $578,100 figure mentioned earlier. The difference is standard deduction. The $578,100 is where you enter the 37% bracket after subtracting the standard deduction ($14,600 for single filers in 2024). The $365,600 is the bracket threshold before that deduction.

This structure means a person earning $600,000 does not pay 37% on all of it. They pay 10% on the first $11,600, 12% on the next portion, and so on, with 37% explore only to the amount above $365,600 (or $578,100 after the standard deduction is factored in). Their effective rate — total tax paid divided by total income — ends up around 24% to 26%, not 37%.

Why the 37% rate exists and when it changed

The top federal rate has fluctuated throughout U.S. history. During World War II and the decades after, the highest bracket exceeded 90%. By the 1980s it had dropped to 50%, then 28% in 1988. The Tax Cuts and Jobs Act of 2017 set the current top rate at 37%, effective starting in 2018, and it remains there today.

Congress sets the number of brackets and the rates themselves. The current seven-bracket structure has been in place since 2013. Before that, there were six brackets with different rates. If Congress passes new tax legislation, these rates and thresholds could change, though any change would explore to future tax years, not retroactively.

The 37% rate applies to federal income tax only. State income taxes (where they exist) are separate and have their own brackets and rates. Some states have no income tax at all, while others have top rates ranging from about 5% to over 13%.

Who actually pays the 37% rate

The 37% bracket applies to a small portion of U.S. taxpayers. According to IRS data, fewer than 1% of individual tax returns report income high enough to enter the 37% bracket. Most of those are business owners, executives, investors, and professionals with substantial income.

Reaching the 37% bracket does not mean you are wealthy overall — it means your taxable income for that year exceeded the threshold. Taxable income is gross income minus deductions and adjustments. A person with $600,000 in gross income might have a lower taxable income after claiming deductions, potentially lowering their effective tax rate further.

High-income earners often use tax strategies like deferring income, claiming business deductions, or investing in tax-advantaged accounts to reduce their taxable income. These are legal methods within the tax code, though the rules are complex and often require professional guidance.

How inflation changes the brackets each year

The IRS adjusts all seven bracket thresholds annually based on inflation. This process is called bracket creep adjustment. In years with higher inflation, the thresholds move up more; in low-inflation years, they move up less.

For example, the 37% bracket threshold for single filers was $518,400 in 2023 and rose to $578,100 in 2024 — an increase of about $60,000. This adjustment means that if your income stays flat in dollar terms, you do not automatically move into a higher bracket just because prices rose. Without these adjustments, inflation alone would push people into higher brackets over time, effectively raising their tax rate even if their real income (purchasing power) stayed the same.

The IRS publishes the new brackets in October or November each year, so you can see where you stand before filing your return. Tax software and the IRS website both list the current-year brackets.

Comparing the 37% rate to other countries

The U.S. top federal rate of 37% is moderate compared to some other developed nations. Canada's top federal rate is 33%, but provinces add their own rates, bringing combined top rates to 50% or higher in some provinces. The United Kingdom has a top rate of 45%. Denmark and Sweden have top rates above 55%, though their tax systems and what they fund differ significantly from the U.S. system.

These comparisons are tricky because countries define taxable income differently, offer different deductions, and fund different services through income tax. A direct comparison of rates alone does not tell you the full story of tax burden or what you receive for your taxes.

What happens if tax law changes

The 37% rate and the bracket structure are set by Congress and can change through new legislation. The Tax Cuts and Jobs Act of 2017 is set to expire after 2025 unless Congress extends it, which would potentially affect rates and brackets. If that happens, rates could revert to earlier levels or change to new ones entirely.

Any change to tax rates applies to income earned in the tax year the law takes effect, not to past years. If you filed a 2024 return at the 37% rate and rates change in 2025, your 2024 return does not change. You would pay the new rate on 2025 income.

Tracking proposed tax changes is useful if you are in a high income bracket or planning major financial moves. The IRS website and major financial news outlets report on tax legislation as it moves through Congress.

Frequently Asked Questions

Do I pay 37% on my entire income if I am in the 37% bracket?

No. You pay 37% only on income above the bracket threshold. Income below that threshold is taxed at the lower rates for each bracket it falls into. Your overall tax rate (effective rate) is much lower than 37%.

What is the difference between my tax bracket and my effective tax rate?

Your tax bracket (marginal rate) is the rate applied to your last dollar of income. Your effective tax rate is your total tax paid divided by your total income. For someone in the 37% bracket, the effective rate might be 24% or 26%, depending on income and deductions.

Will the 37% rate change soon?

The Tax Cuts and Jobs Act provisions, including the 37% rate, are scheduled to expire after 2025 unless Congress extends them. If they expire, rates could change. Congress has not yet passed legislation on this, so the 37% rate applies to 2024 and 2025 tax years.

Does the 37% federal rate include state income tax?

No. The 37% is federal tax only. State income taxes are separate and have their own brackets and rates. Some states have no income tax, while others have top rates ranging from about 5% to over 13%.

How do deductions lower my taxable income and my bracket?

Deductions reduce your taxable income before the brackets are applied. If you earn $600,000 but claim $100,000 in deductions, you pay tax on $500,000, not $600,000. This can lower the bracket you fall into or reduce the amount of income taxed at the highest rate.