tax bracket

Tax bracket

The percentage of tax obligation for a particular taxable income.

---

tax bracket

See marginal tax rate.

---

Tax Bracket

A percentage of one's income that one must pay in taxes. Tax brackets vary according to incomes. That is, one who makes $100,000 per year is usually in a higher tax bracket than one who makes $25,000. However, it is important to note that going into a higher tax bracket does not increase the level of taxation for one's entire income, merely each dollar in the higher bracket. Suppose one pays 10% of one's income up to $25,000 and 20% thereafter. The taxpayer making $25,001 does not suddenly have to pay 20% of his/her entire income, merely on the one dollar over $25,000. That is, he/she owes 10% of $25,000 (or $2,500) and 20% of the $1 over that (or $0.20). All things being equal, this taxpayer owes $2,500.20 in taxes.

---

Tax bracket. A tax bracket is a range of income that is taxed at a specific rate.

In the United States there are six brackets, taxed at 10%, 15%, 25%, 28%, 33%, and 35% of the amount that falls into each bracket.

For example, if your taxable income was high enough to cross three brackets, you'd pay tax at the 10% rate on income in the lowest bracket, at the 15% rate on income in the next bracket, and at the 25% rate on the rest.

The rates remain fixed until they are changed by Congress, but the dollar amounts in each bracket change slightly each year to adjust for inflation.

In addition, the income that falls into each bracket varies by filing status, so that if you file as a single taxpayer you may owe more tax on the same taxable income as a married couple filing a joint return.

---

tax bracket

The highest marginal tax rate to which a person or estate will be subject.Income taxes and estate taxes are calculated as a percentage of adjusted gross income, but the percentage increases as income increases. One's income is divided into brackets with an upper and lower limit to each bracket;the income within the bracket is taxed at its appropriate percentage rate,and then the next bracket is taxed at a higher percentage rate. See marginal tax rate.

---

Tax Bracket

The rate at which income at a particular level is taxed.