Tax Brackets Explained

There are several tax brackets in the US tax system. If you earn more money, you pay a higher percentage on some of your earnings. Here is how the tax brackets break down:

To see how this would break down for other statuses, visit the Money Chimp Website.

The key to understanding the tax bracket system is that if you currently earn $34,000 and you are filing as a single tax payer, you are in the 15% tax bracket. If tomorrow, you will receive a tiny raise and your salary will be $35,000, only $500 of that will be taxed at 25% and the remaining $34,500 will keep being taxed at the 15% rate.