Progressive tax: Definition and examples
Key takeaways
A progressive tax system taxes higher income levels at higher rates and differs from flat and regressive tax systems.
The guide explains how progressive taxes work, compares them to proportional (flat) taxes, and covers the 2025 IRS tax rates.
Practical examples show how different tax systems affect income groups, helping you understand which system may be more suitable.
The definition of progressive income tax is a type of tax that increases as income levels increase. In other words, “a progressive tax takes a larger percentage of income from high-income groups than from low-income groups”.
The opposite of a progressive tax is a regressive tax, which takes a larger percentage of income from lower-income groups compared to higher-income groups. But as it pertains to income tax, progressive taxes are usually compared to proportional taxes, also known as flat taxes.
A proportional (flat) tax² imposes the same percentage tax on higher income groups as lower income groups, regardless of income or assets.
Below, we will further define progressive tax in relation to flat tax, explain how progressive taxes work, uncover 2025 IRS progressive tax rates, and explore some examples of both progressive and flat taxes.
Exploring the concepts behind progressive vs. flat taxes
Progressive taxes are based on an individual’s ability to pay, which the IRS has defined as follows:
“A concept of tax fairness that states that people with different amounts of wealth or different amounts of income should pay tax at different rates. Wealth includes assets such as houses, cars, stocks, bonds, and savings accounts. Income includes wages, interest and dividends, and other payments.”³
Note: While the above definition of ability to pay accounts for both income and wages, and the U.S. has for many years imposed progressive taxes on both income and wealth, when most people refer to progressive and flat taxes, they are referring to progressive and flat income taxes.
Flat taxes are not based on ability to pay. Instead, they are based on the idea that all groups should pay the same tax rate, regardless of income level.
In other words, whereas progressive taxes consider income level in determining and designating a “fair” tax rate, flat taxes do not. Flat taxes are based on the idea that “fairness” in taxation looks like every group paying the same percentage of tax, regardless of impact.
U.S. progressive tax rates for 2025
The following 2025 tax rates were released by the IRS in October 2024 but are subject to change.⁴ At the time of this writing, they will be applicable to tax year 2025 when filing in 2026:
Single
- 10%: $0 - $11,925
- 12%: $11926 - $48,475
- 22%: $48,476 - $103,350
- 24%: $103,351 - $197,300
- 32%: $197,301 - $250,525
- 35%: $250,526-$626,350
- 37%: Over $626,350
Head of household
- 10%: $0 - $17,000
- 12%: $17,001 - $64,850
- 22%: $64,851 - $103,350
- 24%: $103,351 - $197,300
- 32%: $197,301 - $250,500
- 35%: $250,501 - $626,350
- 37%: Over $626,350
Surviving spouse
- 10%: $0 - $23,850
- 12%: $23,851 - $96,950
- 22%: $96,951 - $206,700
- 24%: $206,701 - $394,600
- 32%: $394,601 - $501,050
- 35%: $501,051 - $751,600
- 37%: Over $751,600
Married filing separately
- 10%: $0 - $11,925
- 12: $11,926 - $48,475
- 22%: $48,476 - $103,350
- 24%: $103,351 - $197,300
- 32%: $197,301 - $250,525
- 35%: $250,526 - $375,800
- 37%: Over $375,800
Progressive tax examples
- Alexandra is a single woman who earns $70,000.
- Ricardo is a surviving spouse earning $95,000.
- Don is a married man filing separately from his spouse who earns $700,000.
Keeping in mind these are marginal taxes, here’s what each person would pay based on their income and filing status:
- Alexandra would pay 10% of her income in taxes on the first $11,925 for her income. She would then pay 12% on the portion of her income between $11,926 and $48,475. Finally, she would pay 22% on the remainder of her income as it falls within the $48,476 to $103,350 range. She would pay $10,313.66.
- Ricardo would follow a similar structure, but the brackets differ as he is a surviving spouse. He would pay 10% of his income in taxes on the first $23,850 of his earnings, then would pay 12% on the remainder, as it would fall within that bracket. Ricardo would pay $11,156.88.
- Don’s scenario plays out differently as he ends up having income that spans all of the brackets. Thus, he would pay different percentages on each bracket of his income up to $375,800, then would pay 37% on the remaining income. In all, Don would pay $221,029.63.
Flat tax examples
Assuming a flat tax of 35%, Alexandra, Ricardo, and Don would all pay 35% of their income in taxes. That equates to the following:
- Alexandra: Since Alexandra earns $70,000, she would pay $24,500.
- Ricardo: Since Ricardo earns $95,000, he would pay $33,250.
- Don: Since Don earns $700,000, he would pay $245,000.
In conclusion
A progressive tax increases as income level increases, while a flat tax is the same percentage for all income levels. The reason progressive taxes are levied is to account for ability to pay. The reason flat taxes are levied is to ensure that everyone pays the same tax rate or percentage. While this piece has focused mostly on progressive versus flat income taxes, there are also progressive and flat wealth taxes. The examples shown reflect the impact that each type of tax has on individuals at different income levels.
Progressive taxation is just one of many tax-related topics. Learn more about taxes and how taxation works with Raisin's Tax Guides.
FAQs What is prograssive tax
What is the meaning of regressive tax?
In contrast to progressive taxes, regressive taxes have a greater tax burden on lower income groups, with that burden decreasing as income increases.
What is an example of a progressive and regressive tax?
Federal income tax is the most common progressive tax while sales tax, a form of consumption tax, is a regressive tax.
What is a proportional tax example?
A 35% flat tax applied to all income levels is an example of a proportional tax (also known as a flat tax).
Is progressive or flat tax better?
This is a complex question. Differing opinions exist on this topic.
Theoretically, progressive taxes are based on the idea that a group’s ability to pay should be factored into taxation rates. Flat taxes are based on the idea that everyone should pay the same rate, regardless of the group’s ability to pay.
In effect, lower-income and middle-income groups usually benefit more from progressive taxes since the tax rate they pay often winds up being lower than it would be were they to pay a flat tax. Meanwhile, higher-income groups usually benefit more from flat taxes because the tax rate they pay often winds up being lower than what it would be were they to pay a progressive tax.
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