How marginal tax rates work, what changed for 2026, and how to calculate your federal income tax step by step.
The federal income tax uses a progressive system with seven brackets. Each bracket applies only to income within its range, not your entire income. This is a common source of confusion: moving into a higher bracket does not mean all your income is taxed at that higher rate, only the portion that falls within the new bracket.
The IRS adjusts bracket thresholds annually for inflation. For the 2026 filing season (tax year 2025), here are the current brackets:
| Rate | Taxable Income Range | Tax Owed |
|---|---|---|
| 10% | $0 – $11,925 | 10% of taxable income |
| 12% | $11,925 – $48,475 | $1,192.50 + 12% over $11,925 |
| 22% | $48,475 – $103,350 | $5,578.50 + 22% over $48,475 |
| 24% | $103,350 – $197,300 | $17,651 + 24% over $103,350 |
| 32% | $197,300 – $250,525 | $40,199 + 32% over $197,300 |
| 35% | $250,525 – $626,350 | $57,231 + 35% over $250,525 |
| 37% | Above $626,350 | $188,769.75 + 37% over $626,350 |
| Rate | Taxable Income Range |
|---|---|
| 10% | $0 – $23,850 |
| 12% | $23,850 – $96,950 |
| 22% | $96,950 – $206,700 |
| 24% | $206,700 – $394,600 |
| 32% | $394,600 – $501,050 |
| 35% | $501,050 – $751,600 |
| 37% | Above $751,600 |
Source: IRS Revenue Procedure 2024-40 for tax year 2025.
The most important concept in understanding your taxes is the difference between your marginal rate and your effective rate. Your marginal rate is the percentage applied to your last dollar of income. Your effective rate is the total tax you actually pay divided by your total income.
For example, a single filer earning $80,000 in taxable income is "in the 22% bracket" but does not pay 22% on all $80,000. Here is the actual calculation:
| Bracket | Income in Bracket | Tax |
|---|---|---|
| 10% | $11,925 | $1,192.50 |
| 12% | $36,550 ($48,475 - $11,925) | $4,386.00 |
| 22% | $31,525 ($80,000 - $48,475) | $6,935.50 |
| Total | $12,514 | |
The effective tax rate is $12,514 / $80,000 = 15.6%, far less than the 22% marginal rate. This is why earning a raise that "pushes you into a higher bracket" does not mean you take home less money. Only the income above the bracket threshold is taxed at the higher rate.
The standard deduction reduces your taxable income before brackets are applied. For the 2026 filing season:
| Filing Status | Standard Deduction |
|---|---|
| Single | $15,000 |
| Married Filing Jointly | $30,000 |
| Head of Household | $22,500 |
| Married Filing Separately | $15,000 |
About 90% of taxpayers use the standard deduction. You should itemize only if your total deductible expenses (mortgage interest, state and local taxes, charitable donations, medical expenses above 7.5% of AGI) exceed the standard deduction amount.
Use our state tax calculators to see your combined federal + state tax liability for any income level. Each calculator includes the federal brackets shown above along with state-specific rates. Visit the full state directory to find your state.