Invoice Components
Tax Amount
Understand how tax amounts are calculated using federal income tax brackets and rates for 2025.
How Tax Amounts Are Calculated
Your tax amount depends on your taxable income and filing status. The U.S. uses a progressive tax system, where different portions of your income are taxed at increasing rates. Only the income within each bracket is taxed at that bracket's rate—not your entire income.
2025 Federal Tax Brackets (Single Filer Example)
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 – $11,925 |
| 12% | $11,926 – $48,475 |
| 22% | $48,476 – $103,350 |
| 24% | $103,351 – $197,300 |
| 32% | $197,301 – $250,525 |
| 35% | $250,526 – $626,350 |
| 37% | $626,351+ |
Example Calculation
For a single filer with $50,000 taxable income in 2025:
- First $11,925 taxed at 10% = $1,192.50
- Next $36,550 ($11,926–$48,475) taxed at 12% = $4,386.00
- Remaining $1,525 ($48,476–$50,000) taxed at 22% = $335.50
Total Tax: $1,192.50 + $4,386.00 + $335.50 = $5,914.00
Key Terms
- Marginal Tax Rate: Your highest tax bracket (e.g., 22% in the example above).
- Effective Tax Rate: Your average tax rate (e.g., ~11.8% for $5,914 on $50,000 income).
How to Reduce Your Tax Amount
- Deductions: Lower your taxable income (e.g., retirement contributions, student loan interest).
- Tax Credits: Directly reduce your tax bill (e.g., Child Tax Credit, Earned Income Credit).
State Taxes
Most states add their own income tax. For example, South Carolina has a top rate of 6.4% (2023), but rates vary by state. Always check your state’s tax rules.
Tools to Estimate Your Tax
Use a tax bracket calculator or federal income tax calculator to estimate your tax amount quickly.