Marginal tax brackets
One of the most common misconceptions about tax brackets is that they apply to all your income, but that isn't how it works. For example, single filers with taxable income ranging from $100,525 to $191,950 in 2024 will be in the 24% tax bracket. But that doesn't mean they'll pay 24% of their entire taxable income. They'll only pay this rate on income that falls within the bracket.
We'll go through an example in the next section, but this is what is known as a marginal tax bracket system. For example, taxpayers filing single in 2024 will pay 10% on the first $11,600 in taxable income. The next bracket (12%) only applies to income that exceeds this amount. We won't list all of the 2024 tax brackets here, but here are the tax brackets for single filers, which we'll use to show an example.