A tax rate is the incremental tax percentage that is applied to the next incremental dollar of taxable income. In a progressive tax system, the tax rate increases as the reported income level of the taxpayer increases. The federal and state governments both apply a tax rate to a taxpayer's income. The level of tax rate progression varies, depending on the tax rate schedule used by each government entity. For an individual taxpayer, the tax rate depends on whether the person is filing as single, joint, or head of household.