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Tax Brackets

Your tax bracket is used to estimate the amount of additional tax you'll pay if your income increases, or the amount you'll save if you claim a deduction. If you're in the 25% tax bracket, you can expect to pay about $250 additional tax if you have $1,000 additional taxable income. In the 15% tax bracket, a $200 deduction will save you about $30. The higher your income, the higher your tax rate. The range of income where you stay at any particular rate is known as a tax bracket. For a single person, in 2004, the rate on taxable income between $29,050 and $70,350 is 25%. So those numbers establish the 25% bracket.