Tax Calculator

How federal income tax works

The US uses a progressive tax system. Your income isn't taxed at a single flat rate — instead, it's divided into segments called brackets. Each bracket is taxed at a higher rate than the one before it. The bracket waterfall chart above shows exactly how your income flows through each tier.

Adjusted Gross Income (AGI)

Your AGI is your total gross income minus above-the-line deductions like the self-employment tax deduction (50% of SE tax). AGI determines eligibility for many credits and deduction phase-outs.

Standard vs. itemized deduction

You can take the standard deduction or itemize. The calculator shows both totals to help you decide. Itemizing makes sense when your mortgage interest, state/local taxes (capped at $10,000), charitable contributions, and qualifying medical expenses exceed the standard deduction.

Worked example

Single filer, $85,000 W-2 wages, standard deduction, no other adjustments. Here is how the math works step by step.

Gross income          $85,000
− Standard deduction  −$15,000
= Taxable income       $70,000

Federal income tax:
  10% × $11,925        = $1,193
  12% × $36,550        = $4,386   (bracket: $11,925 – $48,475)
  22% × $21,525        = $4,736   (bracket: $48,475 – $70,000)
  ─────────────────────────────
  Total federal tax    = $10,314

Effective rate: $10,314 / $85,000 = 12.1%
Marginal rate: 22%

FICA (W-2 employee share):
  Social Security 6.2% × $85,000 = $5,270
  Medicare        1.45% × $85,000 = $1,233
  Total FICA                       = $6,503

Combined federal income tax + FICA = $16,817, or about 19.8% of gross pay. State income tax would be added on top depending on your state.

When to use this calculator

• Estimating whether you will get a refund or owe at tax time
• Planning withholding adjustments after a life event (marriage, new job, home purchase)
• Modeling the tax impact of a raise, bonus, or freelance project
• Comparing filing statuses (single vs. married filing jointly) to see which produces a lower bill
• Evaluating pre-tax deductions like 401(k) contributions or HSA contributions — each dollar reduces your AGI and can drop you into a lower bracket
• Deciding between the standard and itemized deduction before you file

Key concepts

Marginal rate vs. effective rate

Your marginal rate is the rate on your next dollar of income — the top bracket you reach. Your effective rate is total tax divided by total income. For most people these differ by 5–10 percentage points. When someone says "I'm in the 22% bracket," they mean their marginal rate, not what they actually pay overall.

Standard deduction vs. itemized deduction

The standard deduction is a flat reduction ($15,000 single, $30,000 MFJ in 2026). Itemizing lets you deduct specific qualifying expenses — mortgage interest, state and local taxes (SALT, capped at $10,000), charitable contributions, and certain medical expenses. You pick whichever is higher; you cannot take both.

FICA (Social Security + Medicare)

FICA is withheld from every paycheck. Social Security is 6.2% on wages up to the annual wage base ($176,100 projected for 2026); Medicare is 1.45% with no cap, plus an Additional Medicare Tax of 0.9% above $200,000. Self-employed workers pay both halves (15.3%) but deduct 50% from AGI.

Adjusted Gross Income (AGI)

AGI is gross income minus above-the-line deductions such as the student loan interest deduction, self-employment tax deduction, and traditional IRA contributions. AGI is the starting point for calculating your standard or itemized deduction, and it gates eligibility for credits like the EITC and Child Tax Credit.

Tax credits vs. tax deductions

A deduction reduces your taxable income, so its value depends on your marginal rate. A $1,000 deduction saves $220 if you're in the 22% bracket. A credit reduces your tax bill dollar-for-dollar — a $1,000 credit always saves $1,000. Refundable credits (like EITC) can even generate a refund beyond what you owed.

Methodology & limitations

• Uses 2026 projected federal tax brackets and standard deductions.
• State taxes use simplified bracket structures — local taxes, surtaxes, and state-specific credits are not modeled.
• EITC uses projected 2026 parameters; actual thresholds may differ slightly.
• Education credits use simplified maximum amounts without income phase-out.
• Does not model AMT, estimated tax payments, or prior-year carryovers.
• Withholding auto-estimate assumes standard W-4 matching your filing status.
• Self-employment tax uses the 92.35% net earnings factor and applies the 50% deduction.

Frequently asked questions

This tool is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for decisions specific to your situation.