The percentages listed in the tax chart — 10%, 12%, 22%, 24%, 32%, 35% and 37% —are called “marginal tax rates.”
Tax deductions can reduce the amount of income upon which taxes are owed. So, if a person’s tax bracket was 24% and a $500 deduction applies, that saves that person $120 in taxes.
Investors may need to pay taxes on stocks held in their investment portfolios.
Long-term capital gains, meanwhile, aren’t taxed for single filers making $40,000 or less or married couples who are filing jointly and made $80,000 or less.