For example, if a person earns $9,276 in a year, they do not have to pay 15% of that whole amount. The first $9,275 that they earned falls into the first tax bracket ($0 $9275, which has a 10% tax rate). The person pays the 10% tax rate for all of their income that fell into that tax bracket. The person has only $1 left in income that falls into the next tax bracket ($9,276 $37,650). They only have to pay that tax bracket's tax rate of 15% on that one dollar.