what is a tax rate 
a tax rate is a percentage at which the income of an individual or corporation is taxed the united states uses a progressive tax rate system imposed by the federal government and many states with such a system the tax rate charged increases as the amount of the person s or entity s taxable income increases an ability to pay or progressive tax collects more money from taxpayers with higher incomes understanding tax ratesto help build and maintain a nation s infrastructure as well as to support social services a government taxes its residents the tax collected is used for the betterment of the nation society and all living in it in the u s and other countries a tax rate is applied to taxpayer income whether earned from wages or salary investment income such as dividends and interest capital gains from investments or profits made from selling goods or services a percentage of earned and unearned income is remitted to the government for income tax the tax rate is the percentage of an individual s taxable income or a corporation s earnings owed to state federal and in some cases municipal governments the tax rate applied to an individual s income depends on the marginal tax bracket the marginal tax rate used by the u s government is indicative of its progressive tax system current tax ratesfor individuals the dollar threshold for each tax rate is dependent upon the status of the filer whether they are single the head of a household married filing separately or married filing jointly the marginal tax brackets for 2023 and 2024 are 12a single individual who earns 62 000 in 2023 will be taxed as follows 10 on the first 11 000 12 on the next 33 725 the amount over 11 000 up to 44 725 then 22 on the remaining 17 275 the amount over 44 725 up to 95 375 all of which equals 8 947 50 another individual who earns 160 000 will be taxed 10 on the first 11 000 12 on the next 33 725 22 on the next 50 650 the amount over 44 725 up to 95 375 then 24 on the remaining 64 625 the amount of income that falls between 95 375 and 182 100 all of which equals 31 800 following this example the single taxpayer who falls in the third marginal tax bracket will pay less tax than the single taxpayer who falls in the fourth and higher bracket a marginal tax rate means that different portions of income are taxed at progressively higher rates although these taxpayers fall in the third and fourth marginal brackets they do not pay flat rates of 22 and 24 respectively on all of their income due to the nature of the marginal tax calculation if they did the first individual would pay 22 x 62 000 13 640 the second would pay 24 x 160 000 38 400 in total individual a pays an effective rate of 14 4 8 947 50 62 000 and the individual with the higher income pays a rate of 19 9 31 800 160 000 these rates are called effective tax rates and represent the actual percentage at which the tax is levied for a tax year sales and capital gains tax ratestax rates also apply as sales tax on goods and services real property tax short term capital gains tax and long term capital gains tax 