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How Federal Income Tax Brackets Work. Say a married couple, filing jointly, in 2016, had a taxable income of $175,000. Each dollar over $151,900âor $23,100âwould fall into the 28% federal income tax bracket. However, the couples' total federal tax would have been $35,986âjust about 20%, of their adjusted gross income.
Of course, the US tax system is much more complicated than this, because there are state taxes, Social Security/Medicare taxes, pre-tax deductions, capital gains taxes, etc. In the simplest case, however, this is the basis for how federal income taxes work. The IRS also publishes a detailed table that describes marginal tax rates.