Tax season is approaching, and many Americans will soon shift their focus to completing their taxes. Each year, the Internal Revenue Service updates tax brackets, which categorize income into different tiers subjected to various tax rates in our progressive tax system. Knowing these categories is crucial for estimating what you might owe in taxes.
Tax rates increase with higher income levels. Basically, the lowest income bracket is taxed at the lowest rate, and as you move up to the next brackets, the rates incrementally rise. However, it’s worth noting that the highest tax rate only applies to the income within the top bracket you’ve reached.
It’s also important to recognize that tax rates adjust with inflation. The tax bracket for 2025—which will show up on your tax return in 2026—will be slightly higher than the previous year.
How do tax classifications work?
Take, for example, an individual earning $75,000 in 2025. This person, being single, will face a minimum tax rate of 10% on the first $11,925 of their income. For the income that falls between $11,926 and $48,475, the tax rate increases to 12%. Any income beyond $48,475 gets taxed at a higher rate of 22%.
In total, there are seven different tax rates, each with its unique threshold.
The IRS relies on inflation data to adjust tax brackets for the subsequent year. If you receive a raise in 2025 to offset inflation, you might find your rates are similar to those in 2024, assuming all else remains constant. Conversely, if your salary increases at a rate outpacing inflation, you may find yourself entering a higher tax bracket. On the other hand, if wage growth falls behind inflation, you might remain in a lower tax tier.
What is the top tax rate?
The highest tax rate for individuals stands at 37%. In 2025, single taxpayers earning more than $626,350 will fall into this category. Meanwhile, married couples filing jointly will face this top rate if their income exceeds $751,601.
Tax classifications for 2025
The tax brackets for 2025 affecting returns filed in 2026 are as follows:
For individual filers:
- 37% for taxable income over $626,350.
- 35% for income exceeding $205,525.
- 32% for income surpassing $197,300.
- 24% for income above $103,350.
- 22% for income over $48,475.
- 12% for income surpassing $11,925.
- 10% on income up to $11,925.
For married couples filing jointly:
- 37% for taxable income over $751,600.
- 35% for income beyond $501,050.
- 32% for income exceeding $394,600.
- 24% for income surpassing $206,700.
- 22% for income above $96,950.
- 12% for income over $23,850.
- 10% on income up to $23,850.
Head of household tax classification
The IRS typically defines the head of household as the parent responsible for more than half of the household’s expenses. This classification often comes with higher income thresholds than for individual filers, aimed at acknowledging the additional costs they bear.
The tax categories for heads of household in 2025 include:
- 37% for taxable income over $626,350.
- 35% for income surpassing $250,500.
- 32% for income above $197,300.
- 24% for income over $103,350.
- 22% for income exceeding $64,850.
- 12% for income over $17,000.
- 10% on income up to $17,000.
Tax category: 2026 and 2025
The IRS has already detailed the tax brackets for 2026, which you’ll use to file in 2027. The upcoming individual tax brackets are:
- 37% for incomes over $640,600.
- 35% for income above $256,225.
- 32% for income exceeding $201,775.
- 24% for incomes over $105,700.
- 22% for incomes exceeding $50,400.
- 12% for incomes over $12,400.
- 10% on income up to $12,400.
For married couples filing jointly in 2026, the brackets are:
- 37% for incomes over $768,700.
- 35% for incomes above $512,450.
- 32% for income exceeding $403,550.
- 24% for incomes over $211,400.
- 22% for income above $100,800.
- 12% for incomes of $24,800 or more.
- 10% on incomes up to $24,800.
How can I lower my tax rate?
There are several strategies to lower your taxes. If married, filing jointly with your spouse may lead to reduced taxes. Alternatively, depending on your income situation, you might find that filing individually could also lower your rate.
Contributing to a 401(k) is another effective method for decreasing your taxable income. If that’s not an option with your employer, a traditional individual retirement account could be a viable alternative.
