Progressive Tax

A tax that takes a larger percentage of income as income rises.

A progressive tax applies higher rates to higher incomes — the U.S. federal income tax, with brackets rising from 10% to 37%, is the standard example. The design rests on ability to pay: a dollar means less to someone with millions of them. Its opposite is a regressive tax, which takes a bigger share from smaller incomes — sales taxes work this way, since lower earners spend more of what they make. Most real tax systems mix both, and the overall blend defines how the burden is shared.

Because the income tax is a progressive tax, her raise was taxed at a higher rate than her first dollars of salary.