Understanding Your 12% Tax Bracket
Being in the 12% tax bracket does not mean all your income is taxed at 12%. The US uses a progressive tax system — only the income that falls within each bracket is taxed at that bracket's rate. Your first $11,925 is taxed at just 10%, regardless of your total income.
Your effective tax rate of 7.5% is the actual percentage of your gross income that goes to federal taxes. This is always lower than your marginal rate because lower brackets apply to the first portions of your income.
A common myth is that getting a raise can “push you into a higher bracket” and cost you money. This is false — only the dollars above the new bracket threshold are taxed at the higher rate. A raise always results in more take-home pay.