Last updated: 2026-05-16

How U.S. Federal Income Tax Brackets Work

Federal income tax is a progressive tax: different portions of income are taxed at different rates. The top rate does not apply to every dollar earned — only to the slice of income that falls within that bracket. This calculator applies the seven 2025 IRS brackets (10 % through 37 %) to taxable income for any of the four filing statuses.

2025 Federal Tax Brackets

Head of Household and Married Filing Separately have their own thresholds; the rates are identical.
Source: IRS Rev. Proc. 2024-40.

Marginal vs. Effective Tax Rate

Marginal rate is the rate that applies to the next dollar of income — the top bracket reached. It is the rate relevant to decisions about raises, overtime, pre-tax retirement contributions, and Roth conversions.

Effective rate is total federal tax ÷ taxable income. It is always lower than the marginal rate (unless income falls entirely within the 10 % bracket) because every lower bracket was taxed at its lower rate.

Worked Example

A single filer with $80,000 of taxable income in 2025:

Marginal rate: 22 % — Effective rate: $12,514 ÷ $80,000 = 15.64 %

Taxable Income

Taxable income is not the same as gross salary or W-2 wages. It is:

Gross income − above-the-line adjustments − (standard deduction or itemized deductions)

The 2025 standard deduction is $15,000 for single filers and $30,000 for married filing jointly. A single filer earning $95,000 in W-2 wages who takes the standard deduction has a taxable income of approximately $80,000 — the figure entered here. It appears on Form 1040, line 15.

How the tax is calculated

Each bracket contributes tax on the income that falls within it. For taxable income $Y$ and bracket boundaries $b_0 < b_1 < \cdots < b_k$ with rates $r_1, r_2, \ldots, r_k$, the tax owed is the sum of each bracket's rate applied to the income within that bracket — up to the bracket where $Y$ falls.