See exactly how your tax brackets work.
The U.S. uses progressive tax brackets, meaning each slice of your income gets taxed at its bracket's rate, not your entire income at the top rate. This calculator shows that visually, plus the difference between your marginal and effective tax rates.
2026 tax year
Federal brackets and standard deductions update annually. This calculator reflects 2026 tax-year rates per IRS Rev. Proc. 2025-32 (the seven-bracket TCJA structure was made permanent by OBBBA). State taxes not included.
The average rate across your full income. Your marginal rate, on the next dollar earned, is 22%.
How your taxable income is taxed
Each slice of income is taxed at its bracket's rate.
The biggest myth in personal finance: "If I earn one more dollar, I'll be in a higher bracket and lose money." That's not how it works. Only the dollars above each bracket threshold are taxed at the higher rate. Earning more never reduces your take-home, it just means slightly more tax on the additional income.
What this means in practice
Your next $1,000 earned
$780 kept
$220 federal tax
$1,000 in pre-tax 401(k)
$220 tax saved
Costs only $780 to your paycheck
Subtract the standard deduction from gross income to get taxable income.
Taxable income = max(0, $85,000 - $16,100 std deduction) = $68,900
Standard deduction only. Itemized deductions and pre-tax contributions are not modeled here.
Walk the 2026 brackets in order. Each slice of taxable income is taxed at its own bracket rate, not the whole income at the top rate.
Sum of (slice * bracket rate) across the 2026 brackets = $9,870 federal tax
2026 brackets from lib/referenceData2026.ts (IRS Rev. Proc. 2025-32).
The effective rate is total tax over gross income. The marginal rate is the bracket your last taxable dollar fell in.
Effective 11.6% ($9,870 / $85,000) | Marginal 22%
Your next $1,000 earned, and each $1,000 of pre-tax 401(k), both move at the marginal rate.
Tax on next $1,000 = $220 | Pre-tax 401(k) saves $220
The most consequential tax myth in personal finance.
"Don't take the raise, you'll be in a higher tax bracket and actually take home less." Almost every American has heard this. It's wrong. It's been wrong for over a century.
U.S. federal income tax is progressive. The 22% bracket doesn't mean your whole income gets taxed at 22%, it means the slice of income within that range is taxed at 22%. Cross into the 24% bracket and only the dollars above that threshold get the 24% treatment. Everything below it stays taxed exactly where it was.
Earning more income always means more take-home pay. Always. The marginal rate just reduces how much of each additional dollar you keep, never makes you poorer.
Where this DOES matter: when you're deciding between traditional vs Roth retirement accounts, when timing income or capital gains across years, or when figuring out how much a bonus is "worth" after tax. The marginal rate tells you what's happening on the margin. The effective rate tells you the average.
Assumptions
- 2026 federal income tax brackets per IRS Rev. Proc. 2025-32, pulled live from lib/referenceData2026.ts (single-file annual update).
- Standard deduction only. Itemized deductions are not modeled.
- Filing status is single or married filing jointly. Head of household and married filing separately are not modeled here.
- No state income tax. State brackets vary widely; see the Take-home pay calculator for a few state options.
- No FICA (Social Security 6.2% + Medicare 1.45%). FICA is separate from income tax.
- No tax credits (child tax credit, EITC, education credits). These reduce tax owed; not modeled here.
Limitations
- This is one input (gross income) and one filter (standard deduction); real returns involve many more lines.
- Capital gains rates (0%, 15%, 20% for long-term) are NOT the ordinary brackets shown here.
- Alternative Minimum Tax (AMT) and Net Investment Income Tax (NIIT) are not modeled.
- Bracket thresholds update each year. Lib data is current for 2026; next IRS update typically arrives October to November of the prior year.
- It is not a tax return. It does not file IRS Form 1040 or any other form.
- It is not personalized tax advice. A CPA earns their fee on this for households with non-trivial deductions, credits, or filings.
- It is not a state-tax estimate. State income tax math varies by state.
- It is not a recommendation about specific tax-planning moves (Roth conversions, harvesting, etc.).
Common questions.
What's the difference between marginal and effective tax rate?
Your marginal tax rate is the rate applied to your next dollar earned, the bracket your last dollar of taxable income falls into. Your effective tax rate is your total tax divided by your total income, the average across everything. Effective rate is always lower than marginal rate because lower income brackets are taxed at lower rates. For example, someone in the 22% marginal bracket might have a 14% effective rate.
Will earning more money put me in a higher bracket and reduce my take-home pay?
No. This is one of the most common tax myths. Progressive brackets only tax the income above each threshold at the higher rate, not your entire income. Earning $1 over a bracket threshold means that one dollar is taxed at the higher rate, not all your income. You always take home more by earning more, just slightly less of each additional dollar.
How do tax brackets work in 2026?
The 2026 federal tax brackets for single filers are: 10% on income up to $12,400, 12% from $12,401-$50,400, 22% from $50,401-$105,700, 24% from $105,701-$201,775, 32% from $201,776-$256,225, 35% from $256,226-$640,600, and 37% above $640,600. Married filing jointly thresholds are roughly double. These apply to taxable income, your gross minus the standard deduction ($16,100 single, $32,200 married) or itemized deductions. Source: IRS Rev. Proc. 2025-32.
How does a 401(k) contribution save on taxes?
Pre-tax 401(k) contributions reduce your taxable income dollar-for-dollar, which lowers your federal tax bill at your marginal rate. Someone in the 22% bracket who contributes $5,000 to a 401(k) saves $1,100 in federal taxes, meaning the contribution only costs $3,900 in take-home pay. Your taxable income drops by the contribution amount, so the tax that would have applied to that income stays in your paycheck instead; the mechanism is a deduction, not a credit or a payment from the government. The trade-off is you pay tax on the money when you withdraw it in retirement.
Educational simulation only. Uses 2026 federal tax brackets (per IRS Rev. Proc. 2025-32), these update annually for inflation. Excludes state taxes, FICA, deductions beyond the standard deduction, and tax credits. This is not personalized tax advice, consult a CPA or tax professional for your specific situation.