By any measure, the tax code is huge. According to Commerce Clearing House’s Standard Federal Tax Reporter it’s up to 74,608 pages in length.¹
And each Monday, the Internal Revenue Service publishes a 20- to 50- page bulletin about various aspects of the tax code.²
Fortunately, it’s not necessary to wade through these massive libraries to understand how income taxes work. Understanding a few key concepts may provide a solid foundation.
One of the key concepts is marginal income tax brackets.
Taxpayers pay the tax rate in a given bracket only for that portion of their overall income that falls within that bracket’s range.