Federal income tax in the United States is progressive: higher portions of your income are taxed at higher rates. For 2026, the IRS released inflation-adjusted brackets, standard deductions, and contribution limits under Revenue Procedure 2025-32.
Your paycheck is reduced by more than federal income tax alone. Most W-2 employees also pay Social Security and Medicare (FICA). Self-employed workers pay both the employee and employer portions through self-employment tax.
2026 federal tax brackets
Tax brackets apply to taxable income — not gross wages. You subtract adjustments (like 401(k) contributions) and either the standard deduction or itemized deductions to arrive at taxable income.
For 2026, the standard deduction is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household. Only income above your deduction is subject to federal tax.
Marginal rates for 2026 range from 10% on the lowest dollars of taxable income up to 37% on the highest bracket. Moving into a higher bracket does not mean all your income is taxed at that rate — only the dollars in that bracket.
Marginal rate vs. effective rate
Your marginal tax rate is the rate on your last dollar of taxable income. It matters when evaluating a raise, bonus, Roth vs. traditional contributions, or whether a deduction is worth itemizing.
Your effective tax rate is total federal income tax divided by total income (or AGI). It is always lower than your marginal rate for most earners because lower brackets absorb the first chunks of income.
A common mistake is avoiding overtime or side income because you "moved into a higher bracket." Extra income is taxed at the marginal rate on those extra dollars only — not on your entire salary.
FICA and self-employment tax
Social Security tax is 6.2% on wages up to the 2026 wage base of $184,500. Medicare is 1.45% on all wages, plus an additional 0.9% Medicare surtax on wages above $200,000 (single) or $250,000 (married filing jointly).
Self-employed income is subject to self-employment tax (15.3% on net earnings, with Social Security capped at the same wage base). Half of self-employment tax is generally deductible above the line.
FICA is separate from federal income tax. When estimating take-home pay, include both — especially if you have W-2 wages plus freelance or 1099 income.
State tax and year-end planning
Most states levy their own income tax on top of federal. Rates vary from 0% in states with no income tax to roughly 10%+ in high-tax states. Your total tax picture is federal + state + FICA.
Pre-tax retirement contributions (401(k), traditional IRA, HSA) reduce taxable income now. Roth contributions do not reduce current taxes but grow tax-free for qualified withdrawals later.
Credits (child tax credit, education credits, etc.) reduce tax dollar-for-dollar and can produce a refund even when withholding was low. Deductions only reduce the income subject to tax.
Estimate your 2026 taxes
Reading about brackets is useful; running your actual W-2 wages, side income, deductions, and credits through a tax estimator shows what you owe and what you keep.
Use the 2026 Tax Estimator to model filing status, itemized vs. standard deduction, capital gains, self-employment income, and state tax in one place.