What Is a Progressive Tax?

A progressive tax involves a tax rate that increases or progresses as 澳洲幸运5官方开奖结果体彩网:taxable income increases. It imposes a lower tax rate on low-income earners and a higher rate on those with higher incomes. This is usually achieved by creating 澳洲幸运5官方开奖结果体彩网:tax brackets that group taxpayers by income range.

The income tax system in the United States is considered progressive. There are seven tax brackets in 2025 with rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. There were 16 tax brackets in 1985.

Understanding the Progressive Tax

The rationale for a progressive tax is that a flat percentage on all income would place a disproportionate burden on people with low incomes. The dollar amount owed ♚might bওe smaller, but the effect on their real spending power would be greater.

How progressive a tax structure is depends🌼 on how much of the tax burden is transferred to higher incomes. A tax code with tax rates ranging from 10% to 80% would be more progressive than one with rates ranging from 10% to 30%.

Advantages and D꧟isadvantage𒆙s of a Progressive Tax

Advantages

A progressive tax system reduces the tax burden on those who can least afford to pay. A single filer only has to pay 10% in federal income tax if they earn $11,925 or less a year as of 2025. Single filers who earn more than $626,350 annually must pay 37% on every dollar of income earned over $626,350.

A progressive tax system tends to collect more taxes than flat taxes or regressive taxes because the highest percentage is collected from those with the highest amounts of money. Those with greater resources fund a larger portion of the services that all citizens and businesses rely on, such as road maintenance an꧙d public safety.

Disadvantages

Critics of a progressive tax system argue that it’s a disi🧜ncentive to success. They also oppose the system as a means of income redistribution, which they believe punishes the wealthy and even the middle class.

Opponents of the progressive tax are generally support🌜ers of low taxes and correspondingly minimal government services.

Progressive Tax vs. Regressive Tax

A regressive tax is the opposite of a progressive tax. A rate is applied uniformly across all le🥂vels of income, so the tax burden decreases as income ri🥀ses.

A 澳洲幸运5官方开奖结果体彩网:sales tax is an example of a regressive tax. Two individuals would pay the same amount of sales tax on an identical bag of groceries even if one earns $300,000 a year and the other earns $30,000. But the less wealthy individual has shelled out a greater percentage of their income to purchase that food.

Progressive Tax vs. Flat Tax

Like a regressive tax, a 澳洲幸运5官方开奖结果体彩网:flat income tax system imposes the same percentage tax rate on everyone regardless of income. The Federal Insurance Contributions Act (FICA) tax that funds 澳洲幸运5官方开奖结果体彩网:Social Security and Medicare is often considered to be a flat tax because all wage earners pay the same percentage. But the Social Security tax does have an earnings cap. It applies only to income up to $176,100 in 2025. You wouldn’t have to pay this tax on $1,000 of your income if you earned $176,200.

The Medicare tax applies to all wages. There’s no earnings cap on this as there is for the Social Security tax.

The Bottom Line

A progressive tax progresses to higher tax rates as taxable income incre🅠ases. Individuals with lower incomes are taxed at lower rates than thos🔯e with higher incomes.

The U.S. progressive income tax involves seven tax brackets, each with its own rate. These tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37% in 2025. The brackets didn’t change from 2024 to 2025, but the ranges of income covered by the brackets increased to reflect inflation.