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Understanding Tax Brackets: How to Stay on Track and Avoid a Surprise Tax Bill


How Tax Brackets Work

The U.S. employs a progressive tax system, meaning different portions of your income are taxed at varying rates. For 2025, the tax brackets for single filers are:​

  • 10%: Income up to $11,925

  • 12%: Income from $11,926 to $48,475​

  • 22%: Income from $48,476 to $103,350​

  • 24%: Income from $103,351 to $197,300​

  • 32%: Income from $197,301 to $250,525​

  • 35%: Income from $250,526 to $626,350​

  • 37%: Income over $626,350​ or more


It's important to note that moving into a higher tax bracket doesn't mean all your income is taxed at that higher rate. Only the portion of income within each bracket is taxed at its corresponding rate.​

Monitoring Your Income and Withholding

To ensure you're on track with your taxes:

  1. Review Total Gross Income: Check your year-to-date (YTD) earnings to see how close you are to the next tax bracket.​

  2. Assess Federal Tax Withholding: Compare the amount withheld to your expected tax liability. If it's insufficient, consider adjusting your W-4 form to increase withholding.​

  3. Account for Deductions and Credits: Incorporate any deductions (e.g., student loan interest) or credits (e.g., Child Tax Credit) into your tax estimates.​

  4. Include Additional Income: For freelance or side income without automatic withholding, you may need to make estimated tax payments to avoid penalties.​

Actions to Take If You Anticipate Owing Taxes

If you foresee a tax liability:

  • Adjust Withholdings: Submit a new W-4 to your employer to increase tax withholding.​

  • Make Estimated Tax Payments: For self-employment or additional income, make quarterly payments to the IRS.​

  • Maximize Deductions: Contribute to tax-deferred accounts like a 401(k) or IRA to reduce taxable income.​

Final Tip

Set reminders to review your paystub at the end of each quarter (March, June, September, and December). Regular adjustments can prevent a significant tax bill during filing season.​

By staying informed and proactive, you can manage your tax obligations effectively and avoid surprises. For personalized advice, consider scheduling a consultation with one of our tax professionals.

 
 
 

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