Tax Bracket
The rate applied to each slice of your income. The U.S. system is marginal: only the dollars inside a bracket are taxed at that bracket's rate.
By Findley's Finance · Last reviewed: September 2026
Why it matters
The most misunderstood concept in taxes: moving into a higher bracket never reduces your take-home pay, because the higher rate hits only the income above the threshold. Earning $1 more into the 24% bracket costs you 24 cents, not a pay cut. This is also why Roth-versus-traditional decisions hinge on brackets — you are really betting on whether your rate now is higher or lower than later.