Understanding Tax Brackets: Why You Never "Lose Money" from a Raise
60% of Americans don't understand progressive tax brackets. Here's why moving to the 24% bracket doesn't mean you pay 24% on all your income.
🎯 Key Concept
- Marginal Rate: Tax rate on your LAST dollar earned
- Effective Rate: Average tax rate on ALL income
- Progressive System: Higher income = higher rates (only on extra income!)
- Bottom Line: A raise ALWAYS increases take-home pay
2024 Federal Tax Brackets (Single Filers)
📊 2024 Tax Brackets
| Tax Rate | Income Range (Single) | Income Range (Married) |
|---|---|---|
| 10% | $0 - $11,600 | $0 - $23,200 |
| 12% | $11,601 - $47,150 | $23,201 - $94,300 |
| 22% | $47,151 - $100,525 | $94,301 - $201,050 |
| 24% | $100,526 - $191,950 | $201,051 - $383,900 |
| 32% | $191,951 - $243,725 | $383,901 - $487,450 |
| 35% | $243,726 - $609,350 | $487,451 - $731,200 |
| 37% | $609,351+ | $731,201+ |
How Progressive Tax Brackets Actually Work
The US tax system is progressive, meaning you pay different rates on different portions of your income. Think of it like filling buckets—each bucket has its own tax rate.
🪣 The "Tax Bucket" Analogy
Let's say you earn $75,000 (single filer)
First Bucket (10%): $0 - $11,600
Tax: $11,600 × 10% = $1,160
Second Bucket (12%): $11,601 - $47,150
Amount in bucket: $35,549
Tax: $35,549 × 12% = $4,266
Third Bucket (22%): $47,151 - $75,000
Amount in bucket: $27,849
Tax: $27,849 × 22% = $6,127
Total Federal Tax: $1,160 + $4,266 + $6,127 = $11,553
Marginal Rate: 22%
Effective Rate: $11,553 ÷ $75,000 = 15.4%
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