Tax brackets determine how much tax an individual owes based on their income level. As income increases, so does the tax rate. The highest tax bracket is for the wealthiest individuals, who pay the highest percentage of their income in taxes. Understanding tax brackets is essential for financial planning and budgeting. By knowing which tax bracket you fall into, you can better prepare for tax season and make informed financial decisions. It is crucial to stay informed about changes to tax brackets, as these adjustments can impact your financial situation. Consulting a tax professional can provide further guidance and assistance.