Tax brackets are the divisions at which tax rates change in a progressive tax system. Essentially, they are the cutoff values for taxable income — income past a certain point will be taxed at a higher rate.

A tax bracket refers to a range of incomes that are subject to a certain income tax rate. In most income tax systems, low incomes fall into tax brackets with relatively low income tax rates, while higher earnings fall into brackets with higher rates. Tax brackets help create progressive income tax schedules.

Single filers who have less than $9,275 in 2016 taxable income fall into the lowest tax bracket and their incomes are subjected to a 10% income tax rate. Single filers who earn more than this amount have their first $9,275 in earnings taxed at 10%, but their earnings past that cutoff point and up to $37,650 are subjected to a 15% rate. Earnings between $37,650 and $91,150 are taxed at 25%, and additional income is taxed at the rate of the bracket into which it falls. As a result, tax filers often fall into more than one tax bracket.

A tax rate is the percentage at which income is taxed, and each tax bracket has a different tax rate. Casually, people often refer to their tax brackets and their tax rates as the same thing, but as most individuals have income that falls into multiple tax brackets, this comparison is not accurate. Rather, an individual's effective tax rate can be determined by looking at the total amount of tax paid as a ratio of his income.

Tax brackets yield a progressive tax system, in which taxation progressively increases as an individual's income grows. This contrasts with a flat tax structure, in which all individuals are taxed at the same rate, regardless of their income levels.

elibrary.ru [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

elibrary.ru [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

www.sciencedirect.com [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

www.sciencedirect.com [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

www.sciencedirect.com [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

pubs.aeaweb.org [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

www.jstor.org [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

www.jstor.org [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

www.sciencedirect.com [PDF]

… 0508 - ECONOMICS, FINANCE … analysis concludes that because the ratio of yields (tax-exempt to taxable) rises with maturity, the marginal tax brackets of the … banking system''s ability to arbitrage the two bond markets is a very strong influence on the marginal tax bracket at work …

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91,150.

9,275.

A tax bracket refers to a range of incomes that are subject to a certain income tax rate.

Three different levels of taxation exist depending on an individual's earnings. The first 9,275 dollars earned are taxed at 10%, earnings between 37,650 and 91,150 dollars are taxed at 15%, and all additional earnings are taxed at 25%. As a result, individuals often fall into more than one category when paying their taxes. This means they must calculate their effective tax rate based on the total amount paid as a ratio of their total taxable income.

Tax brackets help create progressive income taxes by having low incomes fall into lower tax rates and higher incomes fall into higher rates.