WHAT IS A TAX BRACKET AND HOW DO THEY WORK? - If you've ever filed a tax return, you've likely heard of tax brackets. But what exactly are they and how do they work?

Tax brackets are the ranges of income that are taxed at different rates. In the United States, the federal government has a progressive tax system, which means that as your income increases, the percentage of taxes you pay also increases. This is why tax brackets exist – to determine how much tax you owe based on your income level.

Here's an example of how tax brackets work: let's say you are a single filer and your taxable income for the year is $50,000. Based on the tax brackets for the current year, the first $9,950 of your income is taxed at a rate of 10%. The next $40,050 (which is the portion of your income between $9,951 and $50,000) is taxed at a rate of 12%. Your total tax liability for the year would be $6,022.50.

It's important to note that tax brackets only apply to your taxable income, which is your total income minus any applicable deductions. This is why it's important to take advantage of tax deductions and credits, as they can help lower your taxable income and potentially put you in a lower tax bracket.

Tax brackets are also adjusted each year for inflation. This means that the income ranges for each tax bracket may change from one year to the next.

It's always a good idea to familiarize yourself with the current tax brackets and consult with a tax lawyer or refer to the Internal Revenue Service (IRS) for specific questions about your taxes. Understanding how tax brackets work can help you better plan for your financial future and make informed decisions about your income and spending.