Tax brackets are a variation in the percent of taxes paid based upon income level. They are most often referred to in regard to annual individual income tax. The brackets themselves are income cutoff points such that any income over that amount is taxed at the value in the higher backet. As an example, the tax brackets for the United States income tax in 2007 after deductions are:
- 10%: from $0 to $7,825
- 15%: from $7,826 to $31,850
- 25%: from $31,851 to $77,100
- 28%: from $77,101 to $160,850
- 33%: from $160,851 to $349,700
- 35%: $349,701 and up
So an individual with $10,000 in income after deductions would owe 10% on his first $7,825 income and 15% on the remaining $2,175.
The levels for the higher tax brackets are often points of contention in politics and change over time. In some foreign countries, rates for the top brackets can reach as high as 90%.