Guides · Progressive tax

How progressive income tax works

A progressive income tax applies different rates to different slices of your income. The first slice is taxed at the lowest rate, the next slice at the next rate, and so on. Your total tax is the sum of those slices — not your top rate applied to everything.

What "progressive" means

A progressive tax is one in which the marginal rate increases as income rises. In practice, this means the system is divided into bands — each band has its own rate. Income in the lowest band is taxed at the lowest rate; income in the highest band is taxed at the highest rate. Income is never taxed at the highest rate all the way down.

This is different from a flat tax (where every dollar is taxed at the same rate) and from a regressive tax (where lower incomes pay a higher effective rate than higher ones). The US federal income tax, the UK Income Tax, and most European income taxes are progressive.

The band walk

The "band walk" is the process of computing total tax by walking income up through each band. For each band:

  1. Take the slice of income that falls inside the band.
  2. Multiply that slice by the band's marginal rate.
  3. Add it to the running total.
  4. Move to the next band; repeat until income is exhausted.

The top band is usually open-ended — there's no ceiling — so any income above the second-highest band's ceiling is taxed at the top rate alone.

Worked example: UK £60,000 (tax year 2026/27)

Take a single UK resident earning £60,000 gross. The Personal Allowance is £12,570 (taxed at 0%). The basic-rate band covers taxable income from £0 to £37,700 at 20%. The higher-rate band covers taxable income from £37,700 to £125,140 at 40%.

Band walk for £60,000 gross income (UK 2026/27)
Band Income range Slice Rate Tax in band
Personal Allowance £0 – £12,570 £12,570 0% £0
Basic rate £12,570 – £50,270 £37,700 20% £7,540
Higher rate £50,270 – £60,000 £9,730 40% £3,892
Total income tax £7,540

Note that the last £9,730 of income is taxed at 40% — but the first £12,570 is taxed at 0%. Adding them all up gives £11,432 total tax, an effective rate of about 19.1% — well below the higher-rate threshold of 40%.

What progressive tax is not

  • It is not "everyone above £X pays £X rate on all their income". Your top marginal rate applies only to the slice above that threshold.
  • It is not a flat tax. The UK and US federal systems are both explicitly progressive.
  • It does not mean "the government taxes the rich more" in a punitive sense; it means the rate on each additional dollar is higher than the rate on dollars already taxed at lower rates.

How the calculator uses this

Every TaxMetria calculator walks the bands for you. Each slice appears in the result panel as its own line in the "Income tax by bracket" table, with the source fact ID attached. If a calculation disagrees with another source, the band walk is the place to look first — the most common bug in any tax calculator is silently applying a marginal rate to the wrong slice.

Next: Marginal vs effective tax rate.