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Tax & Compliance
Tax Bracket
Definition
A range of income taxed at a specific rate in a progressive tax system.
Overview
In progressive tax systems, higher income is taxed at higher rates. Tax brackets define income ranges and their corresponding rates. Only income within each bracket is taxed at that rate.
Example
In 2024, a single filer pays 10% on income up to $11,600, then 12% on income from $11,601 to $47,150.
Best Practices
Understand your bracket for tax planning. Remember marginal vs. effective tax rates.
Common Mistakes to Avoid
Thinking all income is taxed at the highest bracket rate
Not planning for bracket changes
Confusing marginal and effective rates
Frequently Asked Questions
How do tax brackets work?
You pay different rates on different portions of income. Only income above a threshold is taxed at the higher rate.