7 New Tax Brackets Proposed for High Earners: Who Would Pay More?
Is it time to add more federal income tax brackets? A new analysis says yes.
Every year, millions of taxpayers look at the latest federal income-tax brackets and rates to see where their income falls and how much they might owe the IRS. For the longest time, there have been seven brackets, each with its own marginal tax rate.
But what if there were twice as many brackets?
That’s the crux of a recent proposal from the Roosevelt Institute. Tax policy fellow Samarth Gupta looks at the growing gap between the richest Americans and everyone else and asks whether the U.S. tax code should do more to close it. Gupta's proposition: double the current number of federal tax brackets to 14.
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Under his analysis, that would mean adding seven new brackets for the nation’s highest earners. Why? Here’s more to know.
The case for more tax brackets
The federal tax system is currently divided into seven income tax brackets, with marginal rates ranging from 10% to 37%. But taxpayers don't pay the top rate on all of their income. Instead, different portions of taxable income fall into different brackets and are taxed at their corresponding rates.
For 2026, single filers are taxed at the top 37% rate only on taxable income above $640,600. For married couples filing jointly, the 37% rate applies to taxable income above $768,700.
However, once a single taxpayer’s taxable income exceeds $640,600, for example, every additional dollar is taxed at the same 37% marginal rate, whether that person earns $700,000 or several million dollars.
That’s what spurs the argument for adding more brackets at the top: As income rises beyond the current 37% threshold, the tax rate doesn’t increase.
Note: Gupta's paper builds its 14-bracket model off the base 2024/2025 tax bracket thresholds. In Gupta’s proposed schedule, the existing 37% top bracket threshold starts at $626,351 for single filers and $751,600 for joint filers.
Adding additional brackets could create more steps at higher income levels, so taxpayers with substantially higher incomes would face higher marginal rates on dollars earned above those thresholds.
It's worth noting here that the notion of more federal tax brackets isn't new. As Gupta explains in his paper, the federal tax code has had more than seven brackets in the past.
- In 1916, for example, there were 14 brackets, and the number eventually reached 56.
- From 1916 through 1986, the U.S. averaged more than 27 federal income-tax brackets a year.
- The bipartisan Tax Reform Act of 1986 (signed into law by President Ronald Reagan) essentially reduced the number of individual income tax brackets from 15 to 2 and lowered the top individual marginal tax rate from 50% to 28%.
So, more brackets aren't unprecedented in the U.S. tax system, but what's different about this proposal is placing the additional brackets at the top of the income scale.
14-tax bracket proposal: Who would see higher rates?
Gupta suggests keeping the existing seven brackets and adding seven more, beginning at $900,000 of taxable income for single filers. In both versions described in the paper, the additional brackets would apply only to very high levels of taxable income, so most taxpayers wouldn't be affected.
- One version would raise the marginal rate gradually from 38% at $900,000 to 50% at $10 million. (Under that scenario, the additional rates would be 40% at $1.4 million, 42% at $2 million, and 44% at $3 million, with higher rates continuing from there.)
- A second version would start with a 40% marginal rate at $900,000 and eventually reach 70% at $10 million. (The rates would rise to 50% at $3 million, 55% at $4.5 million, and 62% at $6.8 million.)
Note: These are illustrative scenarios, not legislatively proposed changes to the tax code. No bill currently before Congress would create these specific brackets and rates.
Gupta's analysis uses IRS data to show that incomes vary dramatically even among the nation’s highest earners, from hundreds of thousands of dollars a year to tens of millions. Yet once taxpayers reach the top bracket, the marginal tax rate stays at 37%, even as their incomes climb into the millions. Hence the suggestion that more brackets would let tax rates rise as income increases.
Could more brackets mean more revenue?
According to Gupta, adding more federal tax brackets wouldn't necessarily make filing a tax return more complicated. (Much of the complexity taxpayers deal with during tax season comes from the many tax deductions, credits, exclusions, phaseouts, and other IRS rules that determine taxable income.)
But higher marginal rates can affect how taxpayers manage their finances. The analysis notes that with more brackets, some taxpayers could shift earnings into capital gains or other forms of compensation that may receive different tax treatment.
As a result, adding more tax brackets wouldn't, by itself, solve the income inequality problem in the United States. Gupta argues that changes to individual tax rates must be paired with broader reforms involving capital gains taxes, corporate taxes, and other parts of the tax code.
- Gupta also presents the 14-bracket approach as one way to generate additional revenue as the federal government faces growing fiscal pressure.
- With the U.S. national debt hitting $40 trillion, he argues that adding targeted tax-rate steps at the top could raise revenue without increasing taxes on middle-income taxpayers.
However, the analysis doesn't offer a single dollar figure for how much revenue the 14-bracket proposal could raise. The total would depend on the final tax rates, income thresholds, and how top earners respond.
The seven tax brackets: Bottom line
It's true that none of this changes anyone’s tax bill. The proposal is a policy recommendation, not a legislative proposal. But it does raise interesting questions as lawmakers grapple with rising wealth inequality, national debt, and affordability concerns.
For now, the seven existing federal tax brackets and marginal rates will apply to your 2026 taxes. And remember: moving into a higher bracket doesn't mean all of your income is taxed at that rate. Only the portion that falls within that bracket is taxed at the higher rate.
Some good news? Federal brackets are adjusted annually for inflation, and the IRS will announce the new 2027 thresholds soon. Stay tuned.
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