The United States has no single tax rate—it uses a system of brackets where you pay different percentages on different portions of your income
The federal income tax rate you pay depends on how much money you earn and your filing status. The system works like steps: you pay 10% on your first chunk of income, then 12% on the next chunk, and so on, up to 37% on the highest bracket. The exact dollar amounts that trigger each step change every year. For 2024, a single person earning $47,150 pays 12% on income above $11,601 but below $47,150, not 12% on everything.
This is called a progressive tax system. It means higher earners pay a larger percentage overall, but nobody pays the top rate on their entire income. Most people confuse "tax bracket" with "tax rate"—being in the 24% bracket does not mean you pay 24% on all your money.
Beyond federal income tax, you also owe payroll taxes (Social Security and Medicare), and depending on where you live, state and local income taxes. Some states have no income tax at all. This guide covers federal rates; your actual total tax bill depends on your state.
Key Takeaways
- Federal income tax uses seven brackets ranging from 10% to 37%, and the bracket thresholds change each year based on inflation.
- Your tax bracket is the highest rate you pay, but you do not pay that rate on your entire income—only on the portion that falls in that bracket.
- Payroll taxes (Social Security and Medicare) add 7.65% to your federal burden if you are an employee, or 15.3% if you are self-employed.
- State and local income taxes vary widely: some states charge nothing, while others charge up to 13% or more.
- Your filing status (single, married filing jointly, head of household) changes the income thresholds for each bracket.
Federal Income Tax Brackets for 2024
The Internal Revenue Service (IRS) sets seven federal income tax brackets each year. For 2024, here is how they work for a single filer:
| Tax Rate | Income Range (Single) |
|---|---|
| 10% | $0 to $11,600 |
| 12% | $11,601 to $47,150 |
| 22% | $47,151 to $100,525 |
| 24% | $100,526 to $191,950 |
| 32% | $191,951 to $243,725 |
| 35% | $243,726 to $609,350 |
| 37% | $609,351 and above |
If you are married filing jointly, the ranges are wider. A married couple's 12% bracket, for example, runs from $23,201 to $94,300. Head of household filers have their own set of thresholds, which fall between single and married rates. These numbers shift upward each January to account for inflation.
To find your bracket, locate your total income in the table that matches your filing status. That tells you the highest rate you pay, but remember: you only pay that rate on income above the previous threshold.
How Marginal Tax Brackets Actually Work
A concrete example shows why this matters. Suppose you are single and earn $60,000 in 2024. You do not pay 22% on all $60,000. Instead, you pay:
- 10% on the first $11,600 = $1,160
- 12% on income from $11,601 to $47,150 ($35,549) = $4,265.88
- 22% on income from $47,151 to $60,000 ($12,849) = $2,826.78
Your total federal income tax is $8,252.66. Your effective tax rate—the percentage of your total income that goes to federal tax—is about 13.8%, not 22%. This is why two people in the same bracket can owe different amounts.
The bracket system protects lower earners. A raise that pushes you into a higher bracket does not mean your entire paycheck gets taxed at the new rate, only the portion above the threshold. You never lose money by earning more.
Payroll Taxes: Social Security and Medicare
On top of income tax, employees pay payroll taxes of 7.65%: 6.2% for Social Security and 1.45% for Medicare. Your employer matches these amounts, but the employee portion comes straight out of your paycheck. If you are self-employed, you pay both the employee and employer share, totaling 15.3%.
Social Security tax only applies to the first $168,600 of your income in 2024 (this cap changes yearly). Once you earn above that, you stop paying the 6.2% Social Security portion. Medicare tax, however, has no cap. High earners also pay an additional 0.9% Medicare tax on income above $200,000 (single) or $250,000 (married filing jointly).
Payroll taxes are separate from income tax and are not reduced by deductions or credits. They hit your paycheck before you see the money.
State and Local Income Taxes
Nine states have no state income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only dividends and interest). The remaining 41 states and Washington, D.C., charge income tax, with rates ranging from less than 1% to over 13%.
California has the highest top rate at 13.3%, followed by Hawaii at 11%, and New York at 10.9%. Some states use a flat tax—everyone pays the same percentage regardless of income. Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, and Pennsylvania all use flat rates between 3.5% and 5.75%.
Many cities and counties add their own income taxes on top of state rates. New York City, for example, adds up to 3.876% to the state rate. If you live in a high-tax state and earn a high income, state and local taxes can rival your federal burden.
Capital Gains and Investment Income
Money from investments is taxed differently than wages. Long-term capital gains—profits from selling an asset you held for more than a year—are taxed at 0%, 15%, or 20%, depending on your income. These rates are lower than ordinary income brackets and do not use the same step structure.
Short-term capital gains (assets held one year or less) and dividends from most investments are taxed as ordinary income at your regular bracket rate. Interest income is also taxed as ordinary income. This is why wealthy people with investment income sometimes pay a lower overall rate than high-earning workers: much of their money comes from long-term gains taxed at 15% or 20%.
Deductions and Credits That Lower Your Tax Bill
Your taxable income is not the same as your gross income. The IRS lets you reduce taxable income through deductions. The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. Most people take the standard deduction rather than itemizing deductions for mortgage interest, property taxes, and charitable donations.
Tax credits are even more valuable because they reduce your tax bill dollar-for-dollar, not just your taxable income. The Earned Income Tax Credit (EITC) can return hundreds or thousands of dollars to lower-income workers. The Child Tax Credit provides up to $2,000 per child. These credits phase out at higher incomes.
Deductions and credits mean your effective tax rate is always lower than your bracket rate. A person in the 24% bracket with a standard deduction and a child tax credit might pay only 12% or 13% of their income in federal tax.
Frequently Asked Questions
What is the difference between my tax bracket and my effective tax rate?
Your tax bracket is the highest rate you pay on any portion of your income. Your effective tax rate is your total tax divided by your total income. A single person earning $60,000 in 2024 is in the 22% bracket but has an effective rate around 13.8% because lower portions of income are taxed at 10% and 12%.
Do I pay federal tax on all my income?
No. You subtract the standard deduction (or itemized deductions) from your gross income first. For 2024, a single person earning $50,000 only pays federal income tax on $35,400 ($50,000 minus the $14,600 standard deduction). Payroll taxes, however, explore to nearly all wages before deductions.
Why do some people pay no federal income tax?
If your income is below the standard deduction for your filing status, you owe no federal income tax. In 2024, a single person earning less than $14,600 typically owes nothing. You may still owe payroll taxes if you are employed. Low-income workers may also receive refundable credits like the EITC that result in a refund even if no tax was owed.
Do the tax brackets change every year?
Yes. The IRS adjusts bracket thresholds each January for inflation. The rates themselves (10%, 12%, 22%, etc.) stay the same, but the income ranges shift upward. This prevents "bracket creep," where inflation alone pushes you into a higher bracket without a real raise.
What happens if I am self-employed?
You pay both the employee and employer portions of payroll tax (15.3% total instead of 7.65%), and you owe federal income tax on your net profit. You can deduct business expenses and half of your self-employment tax, which lowers your taxable income. Self-employed people typically make quarterly estimated tax payments rather than having tax withheld from a paycheck.