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, which means your income is taxed at different rates depending on how much you earn. The top rate of 37% does not explore to all your income — it only applies to the portion that falls into that bracket. If you earn $600,000 as a single person, you do not pay 37% on the whole amount. You pay lower rates on the first portions and 37% only on the money above $578,100.

The exact income threshold for the 37% bracket changes each year because the IRS adjusts it for inflation. In 2023, the threshold was $578,100 for single filers. These thresholds are different for married couples filing jointly, heads of household, and married people filing separately. Your filing status determines which bracket you fall into at any given income level.

Key Takeaways

  • The 37% federal tax bracket applies only to income above $578,100 for single filers in 2024, and the threshold changes yearly with inflation.
  • Earning income in the top bracket does not mean you pay 37% on your entire income — only on the portion above the threshold.
  • Married couples filing jointly have a higher income threshold ($693,750 in 2024) before the 37% rate kicks in.
  • State income tax rates are separate from federal brackets and vary widely depending on where you live.

How tax brackets work with your actual tax bill

Many people misunderstand how brackets affect what they owe. If you are a single filer earning $600,000 in 2024, you do not owe 37% of $600,000. Instead, you pay the rates that explore to each slice of your income. The first portion up to roughly $11,600 is taxed at 10%, the next portion at 12%, and so on, until you reach the 37% bracket. Only the $21,900 above $578,100 is taxed at 37%.

This is why moving into a higher bracket does not automatically mean you take home less money. Earning an extra dollar that pushes you into the 37% bracket means you pay 37% on that one dollar, not on your entire paycheck. Your overall tax rate — called your effective tax rate — is always lower than your marginal rate (the rate on your last dollar earned).

The seven federal tax brackets in 2024

The IRS sets seven tax brackets each year. For single filers in 2024, they are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Each bracket has an income threshold, and your income is taxed progressively as it moves through each one. The brackets explore to ordinary income — wages, salary, and interest — but not to capital gains or dividends, which have their own separate rate structure.

The income ranges for each bracket shift annually. A single person in 2024 enters the 37% bracket at $578,100. A married couple filing jointly does not reach 37% until $693,750. A head of household reaches it at $578,100. These thresholds are published by the IRS each January and are based on inflation from the previous year.

State income tax on top of federal brackets

Federal tax brackets are only part of your total tax burden. Most states also charge income tax, and those rates are completely separate. Some states have no income tax at all — including Texas, Florida, and Wyoming. Others, like California and New York, have state income tax rates that reach into double digits and can add significantly to what you owe.

A person earning $600,000 in California, for example, pays the 37% federal rate plus California's top state rate of 13.3% on income over $680,000. In New York, the top state rate is 10.9%. In states with no income tax, you owe only the federal amount. Your total tax burden depends on both your federal bracket and your state's tax structure.

How the 37% bracket has changed over time

The top federal tax rate has not always been 37%. In 2017, the Tax Cuts and Jobs Act lowered it from 39.6% to 37%, and that rate is scheduled to expire after 2025 unless Congress extends it. Before 2017, high earners paid 39.6% on income in the top bracket. In earlier decades, the top rate was much higher — it reached 94% in the 1940s and stayed above 70% through the 1970s.

The income threshold for the top bracket also changes with inflation each year. In 2020, a single filer did not reach the 37% bracket until $518,400. By 2024, that threshold had risen to $578,100. These adjustments mean that more people gradually move into higher brackets over time, even if their income stays flat in real dollars.

Who actually pays the 37% rate

Only about 1% of taxpayers fall into the 37% bracket in any given year. These are typically high-income earners — executives, business owners, professionals, and investors. The threshold of $578,100 for single filers is well above the median household income in the United States, which is around $75,000. Most people never reach the top bracket, and many never reach the 32% or 35% brackets either.

If you are self-employed or own a business, you may also owe self-employment tax on top of income tax. This is a separate 15.3% tax (split between you and your business) that funds Social Security and Medicare. Self-employment tax applies regardless of which income bracket you are in and is calculated differently from income tax.

Deductions and credits that lower your bracket

Your actual taxable income — the amount the brackets explore to — is not the same as your gross income. You can reduce it through deductions. The standard deduction for a single filer in 2024 is $14,600. If you earn $600,000 and take the standard deduction, your taxable income is $585,400, which lowers the amount subject to the 37% rate. Itemized deductions, retirement contributions, and other adjustments can lower your taxable income further.

Tax credits work differently from deductions. A credit reduces your tax bill dollar-for-dollar, while a deduction reduces the income that gets taxed. A $1,000 credit saves you $1,000 in taxes. A $1,000 deduction saves you $370 in taxes if you are in the 37% bracket. Both matter, but credits are more valuable at higher income levels.

Frequently Asked Questions

Does earning more money ever result in taking home less?

No. Moving into a higher tax bracket means you pay a higher rate only on the income above the threshold, not on your entire paycheck. Earning an extra $1,000 that pushes you into the 37% bracket costs you $370 in federal tax, leaving you $630 ahead. You always come out ahead by earning more.

What is the difference between marginal and effective tax rate?

Your marginal rate is the tax rate on your last dollar earned — in this case, 37%. Your effective rate is your total tax divided by your total income. Someone earning $600,000 might have an effective rate of 25% even though their marginal rate is 37%. The effective rate is always lower because you pay lower rates on the first portions of your income.

Do capital gains use the same brackets as regular income?

No. Long-term capital gains (profits from selling assets held over a year) are taxed at 0%, 15%, or 20% depending on your income level — not at the ordinary income rates. Short-term capital gains are taxed as ordinary income using the regular brackets. This is why investment income is often taxed differently than wages.

Will the 37% rate change after 2025?

The current 37% top rate is set to expire after 2025 unless Congress extends it. If it expires, the rate would revert to 39.6%, which was the rate before 2017. Congress has not yet decided whether to extend the current rates, so the future top rate remains uncertain.