What's the difference between marginal and effective tax rate?
Your marginal rate is the rate on the last dollar you earned — the highest bracket you reach. Your effective rate is total federal tax divided by taxable income, averaging across every bracket. A single filer with $58,900 of taxable income hits a 22% marginal rate but has an effective rate of about 13.0% because most of the income is still taxed at 10% and 12%.
How do federal tax brackets actually work?
They stack. The 2026 single brackets run 10% on the first $12,400, 12% on $12,400–$50,400, 22% on $50,400–$105,700, 24% on $105,700–$201,775, and continue through 32%, 35%, and 37%. Each rate applies only to the slice of income inside that bracket — earning $1 more than a threshold never reduces your take-home pay.
Should I take the standard deduction or itemize?
Take whichever is larger. The 2026 standard deduction is $16,100 single, $32,200 married filing jointly, $16,100 married filing separately, and $24,150 head of household. Itemize only if your mortgage interest, capped $10,000 of state and local taxes, charitable gifts, and medical expenses above 7.5% of AGI total more than the standard amount. After the 2017 SALT cap, the standard deduction is the better choice for most filers.
Does this calculator include state and local income tax?
No — it estimates federal tax only. State income tax varies from 0% (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) to over 13% at the top in California. Add your state's rate separately. Many states use AGI from your federal return as their starting point, then apply their own brackets and deductions.
What is the Alternative Minimum Tax (AMT) and does this calculator handle it?
The AMT is a parallel tax system that recalculates your liability with fewer deductions and a flat 26%/28% rate. You owe the higher of regular tax or AMT. Since the 2017 tax law raised the AMT exemption sharply, very few households below $500,000 pay it. This calculator estimates regular federal tax only and does not run the AMT — if you have large state tax deductions, ISO stock exercises, or private-activity bond interest, check Form 6251.
How do Social Security and Medicare taxes fit in?
FICA is separate from income tax. Employees pay 6.2% Social Security on wages up to the annual wage base ($184,500 in 2026) and 1.45% Medicare on all wages — a combined 7.65%. An extra 0.9% Additional Medicare Tax applies to wages above $200,000 single or $250,000 joint. Self-employed workers pay both halves (15.3%) but deduct half above the line. This calculator does not include FICA.
Are Social Security retirement benefits taxable?
Up to 85% of benefits can be federally taxable depending on combined income (AGI + tax-exempt interest + half of your Social Security benefits). For 2026, single filers with combined income below $25,000 owe no tax on benefits; from $25,000–$34,000, up to 50% is taxable; above $34,000, up to 85% is taxable. Joint thresholds are $32,000 and $44,000. Several states also tax Social Security; most do not.
What's the difference between a tax deduction and a tax credit?
A deduction lowers taxable income and saves you tax at your marginal rate — a $1,000 deduction at 22% saves $220. A credit lowers your tax bill dollar-for-dollar — a $1,000 credit saves $1,000. Refundable credits (Earned Income Tax Credit, the refundable portion of the Child Tax Credit, American Opportunity Credit) can produce a refund larger than the tax you owe; nonrefundable credits (Lifetime Learning, Saver's Credit) can only reduce tax to zero.
Who qualifies for Head of Household status?
You must be unmarried (or considered unmarried) on December 31, have paid more than half the cost of keeping up a home for the year, and have a qualifying person — usually a child or dependent relative — who lived with you for more than half the year. HoH gets wider brackets and a larger standard deduction ($24,150 vs $16,100 single) than filing single, so it's worth claiming when you're eligible.
When are federal income taxes due?
April 15 of the year following the tax year, or the next business day if April 15 falls on a weekend or holiday. You can request an automatic six-month extension to October 15 by filing Form 4868, but extensions only extend filing — not payment. Pay your estimated balance by April 15 or you'll accrue 0.5% per month late-payment penalty plus interest on the unpaid amount.
Why doesn't the calculator estimate my refund?
Refunds depend on what was already withheld from your paychecks (Box 2 of your W-2) compared to your total liability. This calculator estimates the liability; you compare it to the year-to-date federal tax withheld on your latest pay stub. If withholding exceeds estimated tax, you'll get a refund; if not, you'll owe the difference plus any underpayment penalty.
Which tax year does this calculator use?
It uses the IRS 2026 tax-year brackets and the 2026 standard deductions ($16,100 single / $32,200 joint / $16,100 separate / $24,150 head of household), as set by IRS Revenue Procedure 2025-32. Those are the figures for returns filed in early 2027. Brackets and standard deductions are inflation-adjusted each year, so confirm the current year's figures on IRS.gov before filing.
