How do the 2025 federal tax brackets actually work?

The 2025 brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%, and they apply progressively. You first subtract the standard deduction ($16,100 single, $32,200 married filing jointly) to get taxable income. Then each slice of that income is taxed at its own rate: the first dollars at 10%, the next band at 12%, and so on. So a single filer earning $70,000 gross has about $55,000 taxable, and that $55,000 is sliced across the 10%, 12%, and 22% bands — not taxed entirely at 22%. This is why your effective rate is well below your top bracket. Pre-tax 401(k) and HSA contributions shrink taxable income from the top down, saving you at your highest rate. Estimate your bracket and total tax at wealthserene.com/tools/w2-optimizer.