Overview Progressive Tax Regressive Tax
U.S. Federal Income Tax Rates for 2005

A good example of how income taxes can be progressive is provided by the current federal income tax system.

The federal income tax rates for 2005 listed in the table below show, for instance, that the first $7,300 earned by a single individual is taxed at the 10 percent rate. The next $22,400 (up to $29,700) is taxed at 15 percent, and so on. The other categories--married filing jointly or separately, qualifying widows, and heads of households--also have similarly progressive taxation on successively higher ranges of income.

Filing Status and Taxable Income Levels for Federal Income Tax Rates 2005
Single Married Filing Jointly
or Qualifying Widow(er)
Married Filing
Head of
Up to $7,300 Up to $14,600 Up to $7,300 Up to $10,450 10%
$7,301-$29,700 $14,601-$59,400 $7,301-$29,700 $10,451-$39,800 15%
$29,701-$71,950 $59,401-$119,950 $29,701-$59,975 $39,801-$102,800 25%
$71,951-$150,150 $119,951-$182,800 $59,976-$91,400 $102,801-$166,450 28%
$150,151-$326,450 $182,801-$326,450 $91,401-$163,225 $166,451-$326,450 33%
$326,451 or more $326,451 or more $163,226 or more $326,451 or more 35%
long description of table

The federal income tax schedule has an additional progressive feature: "personal exemptions" from taxation on the first few thousand dollars of income earned. In 2005 taxpayers enjoyed a personal exemption from income taxes on the first $3,200 of income when filing as an individual, $6,400 when filing jointly with a spouse as a married couple.

Income taxes are not inherently progressive, but in practice they tend to be structured that way. Critics of raising tax rates as income levels increase often advocate changing the current system to a so-called "flat" income tax system, which would require all income earners to pay the same single rate.

Often these proposals are grounded in the very understandable frustration felt over the complexity of our income tax system and the numerous loopholes and exemptions that are used to promote specific social policies. Still others support a flat federal income tax because they see it as the most equitable system for its equal treatment of all taxpayers.

Source: IRS. (full source)