The federal income tax liability on $1,000,000 of ordinary taxable income is determined by progressive marginal tax brackets, meaning different increments of income are taxed at graduated rates ranging from 10 percent up to the maximum top marginal rate of 37 percent. Because the tax system is tiered, individuals do not pay a flat 37 percent on the entire sum, resulting in an effective tax rate that is lower than the top statutory rate. The exact final tax amount also depends heavily on individual filing statuses, standard or itemized deductions, and state-level income taxes.