tax brackets

Tax brackets refer to the segments of income that are taxed at different rates. In many tax systems, as your income increases, it is divided into portions that fall within specific brackets, each with its own tax rate. For example, the first portion of your income might be taxed at a lower percentage, while higher portions are taxed at higher rates. This means you only pay the higher rate on the income that exceeds specific thresholds, not on your entire income, making the system progressive. This structure is designed to ensure that individuals with higher incomes pay a fairer share in taxes.