How US Federal Income Tax Works
Marginal vs effective tax rates, the standard deduction, and why moving into a higher bracket doesn't tax all your income.
Try the income tax calculatorPut these numbers to workOpen →US federal income tax is progressive: income is taxed in bands called brackets, and each band has its own rate. A common myth is that earning a dollar more can push all your income into a higher bracket. It can't — only the income above each threshold is taxed at the higher rate.
Marginal vs effective rate
The standard deduction
Before brackets apply, most people subtract the standard deduction. For tax year 2024 it is $14,600 for single filers and $29,200 for married couples filing jointly. Only the income above the deduction — your taxable income — is taxed.
A quick example
Suppose a single filer earns $75,000. After the $14,600 deduction, $60,400 is taxable. The first $11,600 is taxed at 10%, the next band at 12%, and the remainder at 22%. That works out to roughly $8,300 in federal tax — an effective rate near 11%, even though the top bracket touched is 22%.
- 1Enter your annual income and filing status.
- 2Read your estimated federal tax, effective rate and after-tax income.
- 3Use the paycheck calculator to estimate take-home pay per paycheck.