How Tax Brackets Work
Being “in the 22% bracket” doesn't mean you pay 22% on everything. Learn how the brackets really stack, the difference between your marginal and effective rate, and why a raise always leaves you with more money. Uses the official 2026 IRS numbers.
Brackets are buckets, not a cliff
The US federal income tax is progressive: higher slices of income are taxed at higher rates. Picture your income being poured into a row of buckets. The first bucket fills up and is taxed at 10%. Only the money that spills over goes into the next bucket at 12%, then 22%, and so on.
Each rate applies only to the dollars inside its bucket. Moving into a higher bracket never changes the tax on the dollars already in the lower buckets.
- First $12,400 × 10% = $1,240
- Next $38,000 (up to $50,400) × 12% = $4,560
- Last $9,600 × 22% = $2,112
- Total tax $7,912, which is 13.2% of $60,000, not 22%
From paycheck to taxable income
Brackets apply to taxable income, not your salary. Several things come off first:
- Start with gross income: wages, plus things like interest, freelance income and unemployment.
- Subtract pre-tax contributions and adjustments: traditional 401(k) contributions, HSA contributions, some student loan interest and similar. What's left is roughly your adjusted gross income (AGI).
- Subtract your deduction: the standard deduction, or your itemized deductions (mortgage interest, state and local taxes, charity, large medical bills) if those add up to more. Most people take the standard deduction.
- The result is taxable income. That's what goes into the buckets.
| Filing status | 2026 standard deduction |
|---|---|
| Single or married filing separately | $16,100 |
| Married filing jointly | $32,200 |
| Head of household | $24,150 |
Extra deductions: people who are 65 or older or blind get a larger standard deduction. For 2025 through 2028 there's also a new deduction of up to $6,000 for people 65 and older, plus new deductions for some tip and overtime income. These phase out at higher incomes. The IRS links in Sources have the details.
The 2026 federal brackets
These are the official IRS brackets for tax year 2026, the return you'll file in early 2027. The IRS adjusts the dollar amounts each year for inflation. The rates stay the same.
| Rate | Single | Married jointly | Head of household |
|---|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 | $0 – $17,700 |
| 12% | to $50,400 | to $100,800 | to $67,450 |
| 22% | to $105,700 | to $211,400 | to $105,700 |
| 24% | to $201,775 | to $403,550 | to $201,750 |
| 32% | to $256,225 | to $512,450 | to $256,200 |
| 35% | to $640,600 | to $768,700 | to $640,600 |
| 37% | over $640,600 | over $768,700 | over $640,600 |
What the calculator leaves out: tax credits (like the Child Tax Credit), long-term capital gains and qualified dividends (taxed at their own lower rates), the new senior, tip and overtime deductions, self-employment tax, Social Security and Medicare (FICA), and state income tax. Use it to understand brackets, not to file.
Marginal rate vs effective rate
The rate on your next dollar
The rate of the highest bucket your income reaches. It tells you how much tax you'd pay on a raise, a bonus, or side income, and how much a pre-tax 401(k) contribution saves you.
Your overall average
Total tax ÷ income. It tells you what share of your income actually goes to federal income tax. It's always lower than your marginal rate once you're past the first bracket.
- Taxable income: $75,000 − $16,100 = $58,900
- Tax: $1,240 + $4,560 + 22% × $8,500 ($1,870) = $7,670
- Marginal rate: 22%
- Effective rate: $7,670 ÷ $75,000 ≈ 10.2% of gross pay
Why it matters: if your marginal rate is 22%, every $1,000 you put into a traditional 401(k) cuts your federal tax by about $220. That's the marginal rate at work.
Raises, deductions, credits and refunds
A raise never lowers your take-home pay (from brackets)
Because only the dollars above the line get the higher rate, crossing into a new bracket costs you a higher rate on just those extra dollars. You always keep most of a raise.
- The first $400 of the raise stays in the 12% bucket: $48 tax
- The other $600 lands in the 22% bucket: $132 tax
- Raise $1,000, extra tax $180, you keep $820
The real exceptions are benefit cliffs, not brackets. Some credits and benefits (like the Earned Income Tax Credit, health insurance subsidies or Medicaid) shrink or stop as income rises. In rare cases that can make a small raise cost more than it's worth. The brackets themselves can't.
Deductions vs credits
- A deduction lowers your taxable income. A $1,000 deduction saves you $1,000 × your marginal rate, for example $120 in the 12% bracket.
- A credit lowers your tax bill directly. A $1,000 credit saves you $1,000. Credits are worth more, dollar for dollar.
Withholding and refunds
Your employer takes tax out of each paycheck based on your Form W-4. When you file, you compare the tax you actually owe with what was withheld. Too much withheld means a refund; too little means you owe. A refund isn't a bonus, it's your own money coming back. You can adjust your W-4 anytime with the IRS Tax Withholding Estimator. Waiting on one? See How to Check Your Tax Refund Status.
FAQCommon questions
If I'm in the 22% bracket, do I pay 22% of my income?
No. You pay 22% only on the part of your taxable income that falls inside the 22% bracket. The lower parts are taxed at 10% and 12%. Your overall (effective) rate is much lower.
Can a raise push me into a higher bracket and lower my pay?
Not because of brackets. Only the extra dollars are taxed at the higher rate. You'll always keep more after a raise. Losing a credit or benefit at a certain income is the only way a raise can backfire, and that's uncommon.
Which tax year do the 2026 brackets apply to?
Income you earn from January 1 to December 31, 2026. You report it on the return you file in early 2027.
Do Social Security and Medicare taxes use these brackets?
No. Those payroll taxes (FICA) are separate flat-rate taxes on wages. The brackets here are only for federal income tax.
Should I itemize or take the standard deduction?
Take whichever is bigger. Add up mortgage interest, state and local taxes, charitable gifts and qualifying medical costs. If the total beats your standard deduction, itemizing saves more. Tax software does this comparison for you.
Does my state use the same brackets?
No. Each state sets its own income tax, and some have none. This page covers federal income tax only.