How This Calculation Works
The US federal income tax uses a progressive bracket system. Your income is taxed at increasing rates as it moves through each bracket — not all at the highest rate.
Your marginal rate is the rate on your last dollar of income. Your effective rate is total tax divided by total income — always lower than the marginal rate.
Common Mistakes to Avoid
- Thinking all income is taxed at the marginal rate. Only income above each bracket threshold is taxed at the higher rate.
- Ignoring deductions. The standard deduction ($14,600 single / $29,200 married in 2024) reduces taxable income significantly.
- Forgetting state taxes. This calculator shows federal only — state income taxes add 0–13% depending on your state.
Worked Example
Scenario: Single filer, $85,000 gross income, standard deduction.
Taxable income: $85,000 − $14,600 = $70,400.
Tax: 10% on first $11,600 = $1,160; 12% on next $35,550 = $4,266; 22% on remaining $23,250 = $5,115. Total = $10,541.
Effective rate: $10,541 ÷ $85,000 = 12.4%. Marginal rate: 22%.