How federal income tax works in 2026
The US federal income tax is progressive: your income is sliced into brackets, and each slice is taxed at its own rate. For tax year 2026 (per IRS Rev. Proc. 2025-32, which folds in the One Big Beautiful Bill Act changes), a single filer pays 10% on the first $12,400 of taxable income, 12% up to $50,400, 22% up to $105,700, 24% up to $201,775, 32% up to $256,225, 35% up to $640,600, and 37% above that. Married couples filing jointly get roughly doubled thresholds: 10% to $24,800, 12% to $100,800, 22% to $211,400, 24% to $403,550, 32% to $512,450, 35% to $768,700, and 37% beyond.
Crucially, the brackets apply to taxable income, not your salary. Before any tax is computed, you subtract the standard deduction — $16,100 for single filers and $32,200 for married filing jointly in 2026 — or your itemized deductions if they’re larger. That’s why a single earner on $85,000 is taxed on only $68,900, and why the first roughly $16,000 of anyone’s income is effectively tax-free at the federal level.
A common myth is that crossing into a higher bracket makes all your income taxed at the new rate. It doesn’t. If a raise pushes you from $105,000 to $107,000 of taxable income as a single filer, only the dollars above $105,700 get taxed at 24% — everything below keeps its old rate. A raise never leaves you with less take-home pay because of brackets alone.
Marginal vs effective rate: a worked example
Take a single filer earning $85,000 in 2026. Subtracting the $16,100 standard deduction leaves $68,900 of taxable income, which lands in the 22% bracket. But the tax isn’t 22% of anything close to $85,000. The first $12,400 is taxed at 10% ($1,240), the next $38,000 at 12% ($4,560), and only the final $18,500 at 22% ($4,070). Total federal tax: $9,870.
That’s the difference between the two rates people confuse constantly. The marginal rate — 22% here — is what the next dollar earned would be taxed at, and it’s the number that matters when you’re weighing a 401(k) contribution or a side-gig hour. The effective rate — $9,870 ÷ $85,000 ≈ 11.6% — is what you actually pay overall, and it’s the number that matters for budgeting. For a married couple earning $150,000 jointly, the same math gives $15,340 of tax on $117,800 taxable, an effective rate of just 10.2%.
| Gross annual income | $85,000 |
| Standard deduction (single) | −$16,100 |
| Taxable income | $68,900 |
| Tax at 10% (first $12,400) | $1,240 |
| Tax at 12% ($12,400 → $50,400) | $4,560 |
| Tax at 22% ($50,400 → $68,900) | $4,070 |
| Total federal income tax | $9,870 |
| Marginal rate | 22% |
| Effective rate (of gross) | ≈ 11.6% |
What this estimate leaves out
Federal income tax is not the only line on your pay stub. FICA — 7.65% for Social Security and Medicare — comes out of wages separately and isn’t reduced by the standard deduction. On $85,000 that’s about $6,503 on top of the $9,870 of income tax, and your employer quietly pays a matching 7.65% on your behalf. If you’re self-employed, you owe both halves yourself.
State income tax stacks on top of the federal bill too, and it varies enormously: nine states levy no income tax at all, while others take a meaningful additional cut of every marginal dollar. This calculator estimates federal tax only, so treat the result as a floor, not your total tax burden — especially if you live in a high-tax state.
The calculator also assumes you take the standard deduction and claim no credits. Real returns can look quite different: the child tax credit, education credits, or heavy itemized deductions (large mortgage interest, big charitable gifts) can cut the bill well below what a clean bracket calculation shows. Use this as a fast, honest baseline, then refine with your actual circumstances.
Legal ways to shrink the bill — and withholding vs filing
The most reliable lever most employees have is pre-tax saving. Contributions to a traditional 401(k), an HSA, or a deductible traditional IRA come off your taxable income before the brackets are applied. For our $85,000 single filer, every $1,000 of 401(k) contributions saves $220 in federal tax right now, because those dollars would otherwise be taxed at the 22% marginal rate — and the money still grows for your retirement. If you’re near a bracket edge, pre-tax contributions can even pull your top dollars down into a lower bracket.
Finally, remember that what your employer withholds each paycheck is only an estimate of this annual bill, driven by the W-4 you filed. When you file your return the following spring, the IRS reconciles the two: withhold too much through the year and you get a refund, too little and you owe the difference (possibly with penalties if it’s large). A big refund isn’t a windfall — it’s an interest-free loan you gave the government. If this calculator’s result differs a lot from what’s being withheld, updating your W-4 is a ten-minute fix.