How do income tax brackets work?

The U.S. uses a progressive tax system where different portions of your income are taxed at different rates. In 2026, the brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. A common misconception: earning more does NOT mean all your income gets taxed at the higher rate. Only the income above each threshold is taxed at the higher rate. Your "effective" (average) tax rate is always lower than your "marginal" (top bracket) rate.