What’s the Difference Between a Tax Rate and a Tax Bracket?

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What’s the Difference Between a Tax Rate and a Tax Bracket?

The phrase tax brackets refers to the Internal Revenue Service (IRS) tables published each year that show the dollar amount of taxes owing by each taxpayer whose income falls between the minimum and maximum income levels. Each tax bracket represents a different tax rate.

A tax bracket is made up of three parts: filing status, tax rate, and income range. The Y-axis depicts tax rates, while the X-axis depicts filing statuses. The body of the tax bracket contains the amount of income taxed at a certain rate for a specific income level.

Each of the seven tax rates applies to a particular amount of income rather than the whole taxable income of a person. Taxpayers use a tax bracket to calculate how much tax they owe.

Key Takeaways

  • A tax bracket is a tax rate for a range of earnings, as indicated on an IRS table that shows the total amount of income tax owed by each individual.
  • A tax bracket is made up of three parts: filing status, tax rate, and income range.
  • Single, married filing separately, married filing jointly, head of household, and qualified widow/widower with dependent child are the five filing statuses with distinct tax rates.

The Internal Revenue Service (IRS) has a progressive tax system, which means that the greater the taxpayer’s income, the higher the tax bracket.

Taxpayers choose the best filing status for their case and determine how much income is taxed after deducting deductions and exemptions. Single, married filing separately, married filing jointly, head of household, and qualified widow/widower with dependent child are the five filing statuses. There are additional seven income tax brackets, each with its own tax rate.

  Ability-To-Pay Taxation Definition


2021 Tax Brackets
Tax rateSingle filersMarried filing jointly or qualifying widow/widowerMarried filing separatelyHead of household
10%Up to $9,950Up to $19,900Up to $9,950Up to $14,200
12%$9,951 to $40,525$19,901 to $81,050$9,950 to $40,525$14,201 to $54,200
22%$40,526 to $86,375$81,051 to $172,750$40,526 to $86,375$54,201 to $86,350
24%$86,376 to $164,925$172,751 to $329,850$86,376 to $164,925$86,351 to $164,900
32%$164,926 to $209,425$329,856 to $418,850$164,926 to $209,425$164,901. to $209,400
35%$209,426 to $523,600$418,851 to $628,300$209,426 to $523,600$209,401 to $523,600
37%$523,601 or more$628,301 or more$523,601 or more$523,601 or more

For example, a taxpayer who earns $50,000 in 2021 and files as single pays a 22% tax rate on just the income between $40,525 and $50,000. They will pay 10% tax on the first $9,950 of income, 12% tax on income between $9,951 and $40,525, and 22% tax on income between $40,525 and $50,000.

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