The United States income tax system is based on a system of tax brackets, where taxpayers pay a progressively higher tax on income above certain levels. Below is a chart of the federal income tax brackets for the 2006 tax year. There are six brackets for ordinary income that range from 10% to 45% and four different classifications of taxpayers. Following the chart, you pay the tax % at a given bracket only for each dollar earned within the bracket’s range. Therefore when your income moves into another bracket, only the money above the previous bracket is taxed at the new percent. For example, if a taxpayer earned $50,000.00 in 2006 they would pay 10% on the first $7,550.00, 15% on the income from $7,551.00 - $30,650.00, and 25% on income from $30,651.00 - $50,000.00.