What is meant by one being in a “tax bracket”?
Tax brackets refer to the range of taxable within which you fall. An income tax bracket usually refers to federal or state tax, not the combined rate. I have put here the tax brackets for 2016 for IRS and State of California.  https://www.irs.com/articles/2016-federal-tax-rates-personal-exemptions-and-standard-deductions  https://www.ftb.ca.gov/forms/2016-california-tax-rates-and-exemptions.shtml According to those, a taxable income of 100,000USD would fall in the 28% bracket for the IRS and 9.30% for State of California. The combined rate is therefore 37.3%. However, this does not mean you would pay 37,300USD. First of all, your applicable tax rate applies only for each dollar in your tax bracket (e.g. 28% * 8,849USD for IRS). Therefore, to calculate your combined taxes you would need to do:  Therefore, your effective tax rate would be much lower than the combined tax rate of 37.3%. Now do note that this is an example to illustrate tax brackets and is nowhere near the amount of taxes you would be required to pay because of various credits and deductions that you would be able to benefit from. Edit: As suggested in the comments, a note on marginal tax rate (referred to here as combined tax rate). This is the rate of taxes paid on an additional dollar of income. Here, every additional dollar of income would be taxed at 37.3%, leaving you with 62.7 cents. "As ApplePie discusses, ""tax bracket"" without any modifiers refers to a single jurisdiction's marginal tax rate.  In your case, this is either your California's ""tax bracket"" or your Federal ""tax bracket"" (not including marginal Social Security and Medicare taxes).  But if someone says ""combined state and federal tax bracket"", they probably mean the combination of your state and federal income tax brackets (again, lot including sales taxes, business and occupational taxes, social security taxes, and medicare taxes).  The math to combine the state and federal marginal tax rates is a bit tricky, because most people can deduct either their state and local income taxes, or their state and local general sales taxes when computing their income for federal income tax purposes.  (The federal ""alternative minimum tax"" restricts this deduction for some people.) For a single person earning $ 100,000 of salaries and wages in California, whose state income taxes are close to their standard deduction, the calculations for the combined marginal income tax rate look something like this: As mentioned above, this understates the tax bite on marginal ""earned income"".  To find the true marginal rate, we need to add in Social Security taxes, Medicare taxes, sales taxes, and business & occupation taxes.  The Social Security and Medicare taxes are sometimes called ""self employment taxes"".  This math omits unemployment insurance and workers' compensation insurance, because those taxes are typically capped well below $ 100,000 per year of income.  This math also omits B & O taxes, because this question is California specific. If an employer wishes to increase an employee's pay by $ 1,076.50, the first $ 76.50 will go to the employer's share of Social Security and Medicare taxes.  The remaining $ 1,000.00 will be subject to the combined marginal income tax rate discussed above, plus will have $ 76.50 go to the employee's share of Social Security and Medicare taxes.  The employee might buy some extra things with some of their extra money, and pay sales tax on them. In 2016, a 9 % sales tax rate was common in California's largest cities. The IRS estimated that (for a single person with no dependents making $ 100,000 per year who did not buy a boat, RV, motor vehicle, or major home construction), about 9 % of their marginal gross income was subject to sales tax."
Most countries with income tax, including the USA, design their withholding system so that in straightforward cases, tax is withheld from each month's paycheck on an annualized basis: tax for a month is calculated on the assumption that you will keep earning the same monthly amount for the rest of the year, and the withholding is set so that the tax is spread evenly across the year. Another way of putting that is that in practice you only get the tax brackets allocated proportionately throughout the year - so up till the end of August you'll only have been assigned 8/12 of the $37450 bracket, and so on. So if your income doesn't change and your general tax affairs don't change, your paycheck also shouldn't change. If your income is irregular or changes during the year then things can get more complicated. As other answers have noted, withholdings are calculated according to tables that normally just take into account that specific month's income. There are various possible changes to your tax affairs that might cause the withholdings to change. For example there'd be an impact from any change in your contributions to tax advantaged things like health insurance or retirement, health or education savings. You might also use form W-4 to change your withholdings yourself. Note that even with a regular income that doesn't change through the year, you might find yourself either owing money or being owed a refund when you file your taxes after the end of the year. It's worth making sure that your W-4 accurately records the allowances you are entitled to, to minimize or eliminate this adjustment. "I am going to skip over the potential debate on ""zero-sum"" taxes and regulation because you are missing my point.  I don't understand ***why that matters***.  If Person A and Person B both have lives that are improving, is it that big of deal that Person A's life is improving faster than Person B other than jealousy?  Both people are better off today than they were yesterday.  That is a good thing.  If real wages in the middle and lower classes were falling I would see a huge issue with that, but that is not what is happening." I suppose if you consider tax liability, and when you moved back in with your parents they started claiming you as a dependent on their taxes, but otherwise single-filer means you are your own household regardless of who rents to you. I think sometimes this is simply ignorance. If my marginal tax rate is 25%, then I can either pay tax deductible interest of $10K or pay income tax of $2.5K.    I think most americans don't realize that paying $10K of tax deductible interest (think mortgage) only saves them $2.5K in taxes.  In other words, I'd be $7.5K ahead if I didn't have the debt, but did pay higher taxes. Taxes were much higher in the period immediately following the Second World War which is widely considered one of the most productive and stable periods of US economic history.  This guy is saying that he is able to run a company only when fiscal policy is dramatically bent to favor corporations and the rich.  More competitive companies will pick up the slack, or the goods and services he offers will go away. "For example, if I have an income of $100,000 from my job and I also   realize a $350,000 in long-term capital gains from a stock sale, will   I pay 20% on the $350K or 15%? You'll pay 20% assuming filing single and no major offsets to taxable income. Capital gains count towards your income for determining tax bracket. They're on line 13 of the 1040 which is in the ""income"" section and aren't adjusted out/excluded from your taxable income, but since they are taxed at a different rate make sure to follow the instructions for line 44 when calculating your tax due." "Do you have other income that you are not considering?  Interest and dividends would be an example, but there are all sorts of options.   Also with your witholding is it set up such that your employers have any idea of your tax bracket ultimately based on your combined incomes?  Usually what they do is take out money assuming you will be in the tax bracket of any given paycheck spread out over the course of a year.  For example, for federal I had an option to select (in an online form that fills out my W4 for me) ""married: withold at higher single rate"" and did to try and cover this fact.  Eventually I may end up having to calculate my own witholding to fix a too-low problem like yours." This actually makes sense, although it's about twice as complicated as any concept I've seen laid out in a business, rather than economics context, so it's no surprise that people (as you say) get it wrong.   Also, it emphasizes that corporate taxation is not exactly an easy thing to deal with. I believe its relevant, because, depending on what you believe your view of what level of taxation is acceptable, if any, is affected.  Someone who believes in big govt will weigh the impact on individuals take home pay much less than someone who doesn't believe in big govt. "My answer has nothing to do with tax brackets or mathematics (I'm taking advantage of the leeway your question allowed), but rather it has to do with career goals and promotion.  Large companies often have large ""Policies & Procedures"" booklets to go with them.  One policy that sometimes exists which would make it a bad idea to accept a raise is: Employee cannot be given more than one   salary increase in a 12-month period This means that if you accept a standard-of-living or merit increase of say, 2% or 3% in April, and then you apply for a job that would otherwise warrant a pay grade increase, you may be forced to wait until the following year to get bumped to the proper pay grade. Of course, this totally depends on the company, but it would be advisable to check your company's H.R. policy on that, if you're considering a move (even a lateral one) in the future." "Do I have to explain the source of all income on my taxes? ""Yes, you do"", say the ghosts of Ermenegildo and Mary Cesarini. https://turbotax.intuit.com/tax-tips/general/what-to-know-about-taxes-on-found-property/L9BfdKz7N The Cesarinis argued to the IRS that the money wasn’t income, and so it should not be taxed as such. The IRS wasn’t swayed by the couple’s argument. The case went to federal court, and the IRS won. “Found” property and money has been considered taxable income ever since. The IRS plainly states that taxpayers must report “all income from any source,"" even income earned in another country, unless it is explicitly exempt under the U.S. Tax Code. This covers a wide range of miscellaneous income, including gambling winnings. According to the Cesarini decision, money you find isn’t explicitly exempt. The tax impact won’t be significant if you find an item of property with a fair market value of only $500 and are in the 25% tax bracket. You’ll owe the IRS $125 ($500 x .25 = $125). However, if you are a finder and keeper of $10,000, your tax burden will be $2,500 ($10,000 x .25 = $2,500)." The focus of this article isn't on tax revenue. The author is discussing income disparity.   The laffer curve doesn't tell the whole story. You are correct, a higher tax rate does not imply higher tax revenue, and a lower tax rate does not imply less revenue. Changing tax rates isn't going to significantly affect tax revenue. However, there are a broad range of other effects when changing tax rates. In evaluating adjustments to tax rates, our focus needs to be on these secondary effects.   We are taxed on *income* not *revenue*.  When I sell you a $10 widget that I paid a worker $2 to produce from $5 of materials, I pay taxes on the $3 net income, not the $10 revenue I received from you.    The main way businesses avoid high marginal tax rates is by increasing deductible expenses, such that their net income after these expenses keeps them below their desired tax bracket.  It is far better to spend that money on something that can benefit the business than simply give it to the government. Any businessman would rather keep his earnings if possible. If that is not possible, he'd prefer to spend them on something that can help him, rather than squandering it on junk or giving it away to the government.   For most businesses, the largest deductible expense is payroll. Any decent employer would prefer to pay out a Christmas bonus instead of giving that same amount to Uncle Sam. Any businessman would prefer to pay for additional advertising, or a charitable donation to a worthy cause, rather than paying the IRS.   Run up the top-tier tax rate and suddenly, businessmen feel a compelling need to lower their prices and pay their workers more. Run up the tax rate, and income disparity shrinks.  Run up the tax rate, and you put more money in the hands of consumers. It means you must pay federal (and possibly state) tax on any income you produce in America -- including Internet and mail-order sales. Tax treaties may keep you from having to pay tax on it again in your own country, or may not. @gef05 He was making a reference to expatriation and renouncing citizenship. Citizens have to pay taxes wherever they are no matter how long they are there, people that renounce their citizenship have to continue paying income taxes to the US IRS for several years I like how whether or not its okay to do *exactly* what the tax code says is determined by your presumed intent in following the tax code, and not whether or not you actually followed the tax code.   Besides, what reasonable person or business *doesn't* minimize their tax burden, in the same way they minimize *every* and *any* burden?