@Jimbob the directioner zambo they have magic, but see how Harry was classified as a Halfblood because his mother was descended from completely Muggle heritage, and so a Muggleborn and Muggleborn is therefore still a Muggleborn
Think of it this way. The family tree is all Muggles. The magic isn’t in the tree itself, it just appears throughout the family. If you are a Muggleborn witch/wizard, your child, if you marry a Muggleborn, will therefore have completely Muggle blood in their veins. Magic doesn’t flow through the blood, so only if they marry a halfblood or a pureblood, or if their child marries either, your family will stay Muggleborn.