What is the US Federal Income Tax?
US federal income tax is progressive: income is sliced into brackets and each slice is taxed at its own rate. Your marginal rate is the rate on your last dollar; your effective rate is total tax divided by total income, and is always lower.
Most filers take the standard deduction — $16,100 single, $32,200 married filing jointly for 2026 — rather than itemising.
Formula & worked example
Tax = Σ (income in each bracket × that bracket's rate)
Worked example: $120,000 single with $8,000 of above-the-line deductions gives an AGI of $112,000. Less the $16,100 standard deduction leaves $95,900 taxable. Tax = 10% on the first $12,400, 12% to $50,400, then 22% on the rest ≈ $15,810. The marginal rate is 22% but the effective rate is only 13.2%.
How to use this us federal income tax calculator
- Enter your gross income from all sources.
- Select filing status — it materially changes brackets and deduction.
- Above-the-line deductions include traditional 401(k), HSA and student loan interest.
- Enter itemised deductions only if they exceed the standard deduction.
Smart tips
- Moving into a higher bracket only taxes the income above that threshold — it never reduces your total take-home.
- Itemise only if mortgage interest, state taxes (capped at $40,400 for 2026, with a phase-out above $505,000 of income) and charity together exceed the standard deduction.
- Traditional 401(k) and HSA contributions reduce taxable income dollar for dollar.
- Tax credits are far more valuable than deductions — a credit reduces tax owed directly, not just taxable income.
- Long-term capital gains are taxed on a separate, lower schedule (0%, 15% or 20%).
Frequently asked questions
What is the difference between marginal and effective tax rate?
Marginal is the rate on your last dollar earned. Effective is total tax divided by total income, and is always lower because of the progressive brackets.
What is the standard deduction for 2026?
$16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household.
Should I itemise or take the standard deduction?
Itemise only if your deductible expenses exceed the standard deduction. Since 2018 the vast majority of filers take the standard.
Does a raise ever reduce my take-home pay?
No. Only the portion above the bracket threshold is taxed at the higher rate, so more gross income always means more net income.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: IRS — federal income tax rates, brackets and the standard deduction. How we check these numbers.