Taxes — Understanding What You Owe

Federal income tax is progressive: Higher income = higher rate, but only on the portion above each threshold.

2024 Tax Brackets (Single):

10%: $0 – $11,600

12%: $11,601 – $47,150

22%: $47,151 – $100,525

24%: $100,526 – $191,950

32%: $191,951 – $243,725

35%: $243,726 – $609,350

37%: Over $609,350

Marginal rate vs. effective rate:

Marginal = rate on your last dollar earned

Effective = total tax ÷ total income (always lower than marginal)

Earning a raise never causes you to net less money

Capital gains tax:

Short-term (held < 1 year) — taxed as ordinary income

Long-term (held > 1 year) — 0%, 15%, or 20% depending on income

Always hold investments > 1 year when possible

Tax deductions vs. tax credits:

Deduction reduces taxable income (saves marginal rate × deduction)

Credit directly reduces tax owed dollar-for-dollar (more valuable)

Reference:

Wikipedia: US Income Tax

https://en.wikipedia.org/wiki/Income_tax_in_the_United_States