Tax, Real Estate, Corporate & Estate Planning
Get Started 800.761.0432
High-Caliber Representation We take pride in providing the breadth of legal representation you need.

Understanding Marginal Income Tax Brackets

By any measure, the United States tax code is huge. It is almost 75,000 pages with footnotes.1

High Bracket

In 1944, the highest federal income tax bracket was 94%. It applied to all income above $200,000 a year and applied to all taxpayers, regardless of filing status.

Source: Tax Policy Center, 2015

Fast Fact: First Tax Brackets

In 1913 -- immediately after the 16th Amendment gave Congress the power to levy taxes on income -- the government set up a system of seven federal income tax brackets with rates ranging between 1% and 7%. Less than one in 100 people had to pay even the lowest rate.

Source:, 2017, August 6, 2017

And each Monday, the Internal Revenue Service (IRS) publishes a 20 to 50-page bulletin about various aspects of the tax code.2

Fortunately, it's not necessary to wade through these massive libraries to understand how income taxes work. Understanding a few key concepts may provide a solid foundation.

One of the key concepts is marginal income tax brackets.

Taxpayers pay the tax rate in a given bracket only for that portion of their overall income that falls within that bracket's range.

Tax Works

Seeing how marginal income tax brackets work is helpful because it shows the progressive nature of income taxes. It also helps you visualize how your total tax rate can be calculated. But remember, this material is not intended as tax or legal advice. Please consult a tax professional for specific information regarding your individual situation.

How Federal Income Tax Brackets Work

Say a married couple, filing jointly, in 2021 had a taxable income of $200,000. Each dollar over $172,750 would fall into the 24% federal income tax bracket. However, the couple's total federal tax would have been $42,582, or just over 21% of their adjusted gross income.

This is a hypothetical example used for illustrative purposes only. It assumes no tax credits apply.

2021 Federal Income Tax Brackets

Your federal income tax bracket is determined by two factors: your total income and your tax-filing classification.

For the 2021 tax year, there are seven tax brackets for ordinary income — ranging from 10% to 37% — and four classifications: single, married filing jointly, married filing separately, and head of household.

Tax RateMarried
Filing Jointly
Head of
10%$0 -
$0 -
$0 -
12%$19,901 -
$9,951 -
$14,201 -
22%$81,051 -
$40,526 -
$54,201 -
24%$172,751 -
$86,376 -
$86,351 -
32%$329,851 -
$164,926 -
$164,901 -
35%$418,851 -
$209,426 -
$209,401 -

1 Washington Examiner, April 15, 2016

2 Internal Revenue Service

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.