What are the 2024-2025 tax brackets and federal tax rates?

When someone asks what are the 2024 tax brackets, they could be referring to the capital gains tax rate, dividend tax rate, marginal tax rate, FICA tax rates, withholding tax rate on bonuses (“bonus tax rate”)?

Not sure which one? Don’t worry! We’ll outline in this post the types of tax rates and when you’ll encounter them during the tax year as part of your tax preparation.

The basics on federal income tax rates

Federal income tax brackets are divided into seven brackets, each reflecting a higher federal income tax rate as income increases. You pay higher federal income tax rate as your income rises. To determine your marginal tax rate, which is your highest federal tax bracket, you’ll need to know two things:

• Your filing status: You may file as Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualified Surviving Spouse.
• Your taxable income: Believe it or not, your taxable income doesn’t only equal your wages. Rather, it’s the total of your taxable income sources which may also include investment interest and retirement distributions, etc. (minus any adjustments and tax deductions). These seven federal tax brackets apply to most types of income, except for certain capital gains and dividends.

Need help determining this number? Find out how to calculate your taxable income.

Tax brackets 2024: What to know for taxes due in 2025

You may be asking yourself, “What tax bracket am I in?” The federal tax brackets can shift slightly each tax year due to inflation adjustments, so you have to reference the year in which you review the income tax brackets. Here we outline the 2024 tax brackets and corresponding 2024 tax rates.

There are seven tax rates for 2024: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

For each tax bracket, the second number is the maximum amount for that tax rate and the next tax rate starts one dollar above it. For instance, the 10% rate for a single filer applies to taxable income up to $11,600 while the 12% rate starts at $11,601.

Tax brackets in 2025: For taxes due in 2026

It’s never too early to start thinking about next year’s taxes and knowing the 2025 tax brackets may help with tax planning. You can find out if you’ll be in a higher tax bracket and make financial moves to take advantage of tax credits and deductions to lower your tax bill.

Tax brackets 2023: For taxes due in 2024

What if you didn’t submit your 2023 tax filing yet? The brackets are different. Take note.

Understanding how federal income tax brackets work

The United States income tax system uses a graduated tax system. This means not all your taxable income is taxed at the same rate, instead, individual taxpayers pay an increasing rate as their income rises as outlined in the tax bracket tables above. After determining your filing status, you apply the applicable tax rates to different portions of your taxable income based on tax brackets. For example, if you fall in the 22% tax bracket, not all your income is taxed at 22%.

Let’s look at Sarah, whose filing status is “Single” with a taxable income of $50,000.

Using the 2024 tax brackets, we can determine Sarah’s tax liability (before any credits):

1. Figure out the amount of tax for each segment of taxable income:
   • 10% on the first $11,600 of taxable income
   • 12% on the next $35,550 ($47,150-$11,600)
   • 22% on the remaining $2,850 ($50,000-$47,150)
2. Add the taxable amounts for each segment:
   • $1,160 + $4,266 + $627 = $6,053

With her 2024 tax return, Sarah will pay $6,053 in tax.

Wait, so which one is the effective tax rate? You might be wondering­­—read on and we’ll explain continuing to use Sarah as an example.  

Income tax rate terms

Let’s review a few relevant terms that relate to this topic.

• Income tax rate: The various percentages at which taxes are applied
• Income tax brackets: The ranges of income to which a tax rate applies (currently there are seven as shown above).
• Marginal tax rate: The rate at which the last dollar of income is taxed. Sarah’s marginal tax rate is 22%.
• Effective tax rate: The total tax paid as a percentage of total income taxed.
• Average tax rate: This is the same as the effective tax rate.  We can think about Sarah’s average tax rate in two ways. For her taxable income of $50,000, her average tax rate is 12%.

If you’re looking for the average federal income tax rate that most taxpayers pay, that’s harder to pin down as it changes every year.  You can also review average tax rate details.

So far, we’ve mainly discussed tax rates for ordinary income, but those tax rates don’t apply to all types of income. Other types of income may follow a different rate structure than the tables above. We’ll outline those next.

Other types of tax rates

There are a few places where you might find these tax rates, like on your investment or broker statements.

Capital gains tax rates and dividend tax rates

When you receive a quarterly investment statement, it may show that you received dividends. If you sold stock or mutual funds, the statement will also show capital gain or loss. To know what dividend or capital gain tax rate applies, it will depend on how long you held the asset.

• Long-term capital gains refer to assets held for more than one year and sold for a profit. The specific rates also depend on your taxable income, but are different from the federal income tax rates above. Use the table in the section below to determine your rate.
• Short-term capital gains refer to assets held for one year or less and sold for a profit. These gains are taxed just the same as ordinary income, so you can refer to the federal income tax rates above.
• Qualified dividend income refers to dividend income on assets held for more than 60 days during the 121-day period starting 60 days before the ex-dividend date. Qualified dividend income is taxed the same rate as long-term capital gains, so the rates shown in the table below will apply.
• Ordinary dividend income refers to dividend income that doesn’t meet the qualified dividend income criteria. These dividends, just like short-term capital gains, are taxed as ordinary income. Refer to the federal income tax rates above.
• Capital gain distributions from mutual funds are generally taxed similarly to qualified dividends.

2024 tax rates: Long-term capital gains (LTCG) and Qualified dividend income (QDI)

*Married Filing Separately: Rates for married individuals filing separate returns are one half of the Married Filing Jointly brackets.

Note: Gains on the sale of collectibles (e.g., antiques, works of art and stamps) are taxed at a maximum rate of 28%.

Social Security tax rate and FICA tax rates

Looking at your paycheck, you can see taxes that are taken out of your take-home pay. Social Security and Medicare taxes fall under the Federal Insurance Contributions Act (FICA) taxes.

Currently, the:

• Social Security tax rate is 6.2%. Both the employee and the employer pay this tax, bringing the total of the Social Security tax rate to 12.4%.
• Medicare tax rate is 1.45%. Both the employee and the employer pay this tax, bringing the total of the Medicare tax rate to 2.9%.

There are some limits and exceptions to Social Security and Medicare tax rates. Get the details in our payroll tax article.

Bonus tax rate (bonus tax withholding rate)

The last category of taxes you might see on your paycheck stub is for any bonus or supplemental wages you received. It is a percentage of tax withheld from pay in certain circumstances: prizes and awards, certain commissions, overtime pay, back pay, and reported tips.

The bonus tax withholding rate is a flat 22% for any amount paid under $1 million. The bonus tax rate jumps to 37% for every dollar received over that amount. Keep in mind, the Social Security portion of the FICA taxes mentioned above may apply to a portion of your bonus payment whereas Medicare taxes apply to the entire portion of your wages.

What if the bonus tax withholding rate is higher than your income tax bracket? You may be eligible to receive a tax refund if too much tax was withheld.

Get help with navigating tax rates and filing your tax return

If you’re looking to understand how various federal tax rates will affect your tax liability, check out H&R Block’s income tax calculator so you can plan ahead.

Knowing your tax bracket is just the beginning. Ready to start filing your return? You don’t have to do it alone. Rely on the expertise of H&R Block to get your maximum refund. Whether you choose to file online or want to file your taxes with a tax professional, we’re here for you.