US Tax Brackets Explained 2025: Federal Income Tax & Payroll Tax Guide

The US tax system includes federal income tax, Social Security, Medicare, and often state taxes. This comprehensive guide explains the 2025 tax year rates and how they affect your take-home pay.

Quick Summary (TL;DR)

Key Points for 2025:

• Standard deduction: $14,600 (single), $29,200 (married filing jointly)
• Federal rates: 10%-37% progressive brackets
• Social Security: 6.2% on income up to $168,600
• Medicare: 1.45% on all income, plus 0.9% on high earners
• State taxes vary by location (0%-13.3%)

Federal Income Tax Brackets 2025

Single Filers

Tax Rate	Taxable Income Range
10%	$0 - $11,000
12%	$11,001 - $44,725
22%	$44,726 - $95,375
24%	$95,376 - $182,050
32%	$182,051 - $231,250
35%	$231,251 - $578,125
37%	$578,126+

Married Filing Jointly

Tax Rate	Taxable Income Range
10%	$0 - $22,000
12%	$22,001 - $89,450
22%	$89,451 - $190,750
24%	$190,751 - $364,200
32%	$364,201 - $462,500
35%	$462,501 - $693,750
37%	$693,751+

Head of Household

Tax Rate	Taxable Income Range
10%	$0 - $15,700
12%	$15,701 - $59,850
22%	$59,851 - $95,350
24%	$95,351 - $182,050
32%	$182,051 - $231,250
35%	$231,251 - $578,100
37%	$578,101+

Payroll Taxes 2025

Social Security Tax

• Rate: 6.2% (employee) + 6.2% (employer) = 12.4% total
• Wage Base: $168,600 (maximum taxable earnings)
• Maximum Annual Tax: $10,453.20 per person

Medicare Tax

• Rate: 1.45% (employee) + 1.45% (employer) = 2.9% total
• No wage limit - applies to all earned income
• Additional Medicare Tax: 0.9% on income over $200,000 (single) / $250,000 (married filing jointly)

Standard Deductions 2025

Filing Status	Standard Deduction
Single	$14,600
Married Filing Jointly	$29,200
Married Filing Separately	$14,600
Head of Household	$21,900

Tax Calculation Examples

Example 1: Single Filer - $60,000 Salary

Federal Income Tax:

• Standard Deduction: $14,600
• Taxable Income: $45,400
• Tax Calculation:
  • 10% on first $11,000 = $1,100
  • 12% on $33,725 ($44,725 - $11,000) = $4,047
  • 22% on $675 ($45,400 - $44,725) = $148.50
• Total Federal Tax: $5,295.50

Payroll Taxes:

• Social Security: $60,000 × 6.2% = $3,720
• Medicare: $60,000 × 1.45% = $870
• Total Payroll Taxes: $4,590

Total Federal Taxes: $9,885.50 Take-home (before state tax): $50,114.50

Example 2: Married Filing Jointly - $120,000 Combined

Federal Income Tax:

• Standard Deduction: $29,200
• Taxable Income: $90,800
• Tax Calculation:
  • 10% on first $22,000 = $2,200
  • 12% on $67,450 ($89,450 - $22,000) = $8,094
  • 22% on $1,350 ($90,800 - $89,450) = $297
• Total Federal Tax: $10,591

Payroll Taxes (each spouse on $60,000):

• Social Security: $120,000 × 6.2% = $7,440
• Medicare: $120,000 × 1.45% = $1,740
• Total Payroll Taxes: $9,180

Total Federal Taxes: $19,771 Take-home (before state tax): $100,229

State Income Tax Considerations

No State Income Tax (9 States)

• Alaska, Florida, Nevada, New Hampshire*, South Dakota, Tennessee*, Texas, Washington, Wyoming
• *New Hampshire and Tennessee tax investment income only

Low Tax States (0-5%)

State	Rate Range	Notes
Colorado	4.40%	Flat rate
Illinois	4.95%	Flat rate
Indiana	3.23%	Flat rate
North Carolina	4.75%	Flat rate
Pennsylvania	3.07%	Flat rate
Utah	4.65%	Flat rate

High Tax States (8%+)

State	Top Rate	Income Threshold
California	13.3%	$1 million+
New York	10.9%	$25 million+
New Jersey	10.75%	$5 million+
Hawaii	11%	$200,000+
Oregon	9.9%	$125,000+

Retirement Account Contributions 2025

401(k) Plans

• Employee Contribution Limit: $23,500
• Catch-up (50+): Additional $7,500
• Total with Employer: $70,000 ($77,500 with catch-up)

Traditional & Roth IRA

• Contribution Limit: $7,000
• Catch-up (50+): Additional $1,000
• Income Limits Apply: Roth IRA phases out at higher incomes

HSA (Health Savings Account)

• Self-only: $4,300
• Family: $8,550
• Catch-up (55+): Additional $1,000

Tax Planning Strategies

1. Maximize Pre-tax Contributions

• 401(k) contributions reduce current taxable income
• HSA contributions are triple tax-advantaged
• Traditional IRA may be deductible depending on income

2. Tax Loss Harvesting

• Offset capital gains with capital losses
• Up to $3,000 in losses can offset ordinary income
• Carry forward unused losses to future years

3. Roth Conversions

• Convert traditional IRA to Roth during low-income years
• Pay tax now to avoid higher rates later
• Consider during market downturns

4. Timing Income and Deductions

• Defer income to next year if expecting lower rates
• Accelerate deductions into current year
• Bunch charitable donations to exceed standard deduction

Important Dates for 2025

Tax Filing

• Tax Year: January 1 - December 31, 2025
• Filing Deadline: April 15, 2026
• Extension Deadline: October 15, 2026

Quarterly Estimated Taxes

• Q1 2025: April 15, 2025
• Q2 2025: June 16, 2025
• Q3 2025: September 15, 2025
• Q4 2025: January 15, 2026

Special Situations

Self-Employment Tax

• Rate: 15.3% (12.4% Social Security + 2.9% Medicare)
• Applies to: Net self-employment income over $400
• Deduction: Can deduct employer portion (7.65%)

Alternative Minimum Tax (AMT)

• Exemption (Single): $85,700
• Exemption (Married): $133,300
• Rate: 26% on income up to $232,600, then 28%

Net Investment Income Tax

• Rate: 3.8% on investment income
• Applies when: Modified AGI exceeds $200,000 (single) / $250,000 (married)

Common Tax Credits 2025

Child Tax Credit

• Amount: $2,000 per qualifying child under 17
• Refundable Portion: Up to $1,700
• Income Limits: Phases out at higher incomes

Earned Income Tax Credit (EITC)

• Maximum Credit: Varies by number of children and filing status
• Income Limits: Apply based on filing status and dependents

American Opportunity Tax Credit

• Amount: Up to $2,500 per student
• Covers: First 4 years of higher education
• 40% Refundable: Up to $1,000

State-Specific Considerations

California Residents

• Additional Taxes: State Disability Insurance (SDI)
• High Earners: Mental Health Services Tax on $1M+ income
• Property Taxes: Relatively low due to Proposition 13

New York Residents

• NYC Tax: Additional 3.876% for city residents
• Convenience Rule: May owe NY tax even if working remotely
• SALT Deduction: $10,000 federal limit significantly impacts high earners

Texas Residents

• No State Income Tax: But higher property and sales taxes
• Franchise Tax: Applies to certain businesses
• Consider: Moving to Texas for tax savings

Money-Saving Tips

1. Employer Benefits

• Health Insurance: Pre-tax premiums save on income and payroll taxes
• Flexible Spending: Use FSA/HSA for medical expenses
• Commuter Benefits: Pre-tax parking and transit passes

2. Tax-Advantaged Accounts

• 529 Plans: State tax deductions for education savings
• Dependent Care FSA: Up to $5,000 pre-tax for childcare
• Life Insurance: Consider employer group term life

3. Itemized Deductions

• Mortgage Interest: On up to $750,000 in acquisition debt
• State and Local Taxes: Capped at $10,000
• Charitable Donations: Up to 60% of AGI for cash gifts

Business Owners & Self-Employed

Section 199A Deduction

• Benefit: Up to 20% deduction on qualified business income
• Limitations: Apply at higher income levels
• Planning: Structure business to maximize deduction

Business Expenses

• Home Office: Deduct portion of home expenses
• Vehicle: Choose between actual expenses or mileage
• Equipment: Section 179 allows immediate expensing

Planning for 2026 and Beyond

Potential Changes

• Tax Cuts and Jobs Act: Many provisions expire after 2025
• Higher Rates: May return to pre-2018 levels
• Plan Now: Consider Roth conversions and income timing

Long-term Strategies

• Asset Location: Place investments in appropriate account types
• Estate Planning: Use current higher exemptions
• Roth Conversions: Take advantage of current lower rates

Frequently Asked Questions (FAQ)

What is the standard deduction for 2025?

For 2025, the standard deduction is $14,600 for single filers, $21,900 for head of household, and $29,200 for married filing jointly.

How much Social Security tax do I pay?

You pay 6.2% Social Security tax on income up to $168,600 in 2025. Your employer matches this contribution.

When do I pay the additional Medicare tax?

The additional 0.9% Medicare tax applies to income over $200,000 for single filers or $250,000 for married filing jointly.

Do I need to pay estimated quarterly taxes?

Yes, if you expect to owe $1,000 or more in taxes and your withholding doesn't cover at least 90% of your current year tax liability.

Which states have no income tax?

Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

What's the difference between marginal and effective tax rates?

Your marginal rate is the tax on your last dollar earned. Your effective rate is your total tax divided by total income.

Step-by-Step: How to Calculate Your US Tax

Step 1: Calculate Gross Income

Add up all sources of income: salary, bonuses, interest, dividends, etc.

Step 2: Apply Standard or Itemized Deductions

Subtract either the standard deduction or itemized deductions (whichever is higher).

Step 3: Calculate Federal Income Tax

Apply progressive tax rates to your taxable income using the brackets above.

Step 4: Calculate Payroll Taxes

Add Social Security (6.2%) and Medicare (1.45%) taxes on applicable income.

Step 5: Add State and Local Taxes

Calculate state income tax, property tax, and local taxes based on your location.

Step 6: Determine Take-Home Pay

Subtract all taxes from gross income to find your net take-home pay.

Conclusion

The US tax system is complex, with federal, state, and local considerations. Effective planning requires understanding all components and their interactions. Use our US Tax Calculator to model different scenarios and optimize your tax strategy.

Key Takeaways:

• Federal rates are progressive, but payroll taxes are flat
• State taxes vary dramatically by location
• Pre-tax retirement contributions provide immediate savings
• Planning across multiple years can minimize lifetime taxes

Disclaimer: Tax laws are complex and change frequently. This guide covers general rules for 2025. Consult a tax professional for advice specific to your situation.