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US federal income tax is progressive. Income is divided into brackets, and only the portion of taxable income within each bracket is taxed at that bracket's rate. Moving into a higher bracket does not change how the lower portions are taxed — it only affects the slice above the new threshold.

That is why the marginal rate and the effective rate are different. A single filer with $75,000 of gross income, for example, takes the $14,600 standard deduction to reach $60,400 of taxable income, sits in the 22% marginal bracket, and pays around $8,341 in federal tax — an effective rate of roughly 11.1%, well below the 22% top bracket.

The standard deduction is applied before brackets, so a larger deduction directly lowers taxable income and the resulting tax owed. Tax credits work differently: they reduce the calculated tax dollar-for-dollar after brackets are applied.

The standard deduction is a flat amount the IRS lets you subtract from gross income without listing individual expenses. Most filers take it because it is simple and, for many households, larger than the total of their itemised deductions.

Itemising makes sense only when your total deductible expenses exceed the standard amount for your filing status. Common itemised deductions include mortgage interest, state and local taxes (capped at $10,000), charitable donations, and certain medical expenses above an income threshold.