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US Federal Income Tax Brackets Explained
Marginal vs effective rates, the standard deduction, and why moving into a higher bracket never cuts your take-home pay.
By Praveen · 6 min read · Updated August 2026
Why so many people fear the wrong thing
Ask around and you'll hear the same worry: 'I don't want a raise that bumps me into the next bracket and leaves me with less.' It's one of the most persistent money myths in America — and it's simply not how the system works. US income tax is marginal: each slice of income is taxed at its own rate, and only the portion that falls inside a higher bracket is taxed at that higher rate.
Understanding this properly is worth real money. It changes how you think about overtime, bonuses, retirement contributions and pay rises — none of which can ever reduce your take-home through brackets alone. This guide walks through exactly how the brackets work, with the 2026 figures, so the myth never costs you a decision again.
| Taxable income | Rate |
|---|---|
| Up to $12,400 | 10% |
| $12,400 – $50,400 | 12% |
| $50,400 – $105,700 | 22% |
| $105,700 – $201,775 | 24% |
| $201,775 – $256,225 | 32% |
| $256,225 – $640,600 | 35% |
| Over $640,600 | 37% |
Brackets are marginal, not all-or-nothing
The single most misunderstood thing about US taxes is how brackets work. When people say they're 'in the 22% bracket', they often fear all their income is taxed at 22%. It isn't. Only the income that falls inside each bracket is taxed at that bracket's rate.
So a single filer in 2026 pays 10% on the first $12,400 of taxable income, 12% on the next slice up to $50,400, and 22% only on income above that — not on the whole amount. This is why a raise can never reduce your take-home: the higher rate only touches the extra dollars.
Marginal rate vs effective rate
Your marginal rate is the rate on your last dollar earned — the top bracket you reach. Your effective rate is your total tax divided by your total income, and it's always lower because the early brackets tax you less.
For example, a single filer earning $90,000 might have a 22% marginal rate but an effective federal income-tax rate closer to 13–14%. Knowing the difference matters: decisions like overtime, a bonus or a 401(k) contribution are judged against your marginal rate, not your effective one.
The standard deduction comes first
Before any brackets apply, you subtract the standard deduction from your gross income. For 2026 that's $16,100 for single filers and $32,200 for married couples filing jointly. The result is your taxable income — the figure the brackets actually run on.
This is why low earners often pay little or no federal income tax: if your income is below the standard deduction, your taxable income is zero. It also means the brackets effectively start higher than they look once the deduction is accounted for.
Don't forget FICA and state tax
Federal income tax is only part of the story. FICA payroll taxes — 6.2% Social Security (up to a wage cap) and 1.45% Medicare — come out regardless of deductions, and most states add their own income tax on top.
That's why two people on the same salary can take home very different amounts depending on their state. Run your number through our US calculator to see federal, FICA and state combined.
Standard deduction versus itemising, after 2017
Brackets apply to taxable income, and taxable income is gross pay minus either the standard deduction or your itemised deductions, whichever is larger. The 2017 tax law roughly doubled the standard deduction while capping the state and local tax deduction, and the combined effect moved the great majority of filers off itemising entirely. If you itemised before 2018 out of habit, the arithmetic has probably changed underneath you.
Itemising still wins in identifiable situations: a large mortgage on an expensive home, a year with substantial medical costs above the income-based floor, significant charitable giving, or a casualty loss in a federally declared disaster area. The SALT cap is what usually decides it — in a high-tax state with a large property tax bill, the deduction you can actually claim is limited regardless of what you paid. Run both totals rather than assuming last decade's answer still holds.
State tax is the variable that dwarfs the federal one
Federal brackets are identical in all fifty states, so two people earning the same salary differ almost entirely on state and local tax. Nine states levy no tax on wage income at all. At the other end, California's top marginal rate exceeds 13% and New York City residents pay a city income tax on top of the state's.
The trade is rarely as clean as the headline suggests. States without an income tax raise revenue somewhere — Texas and New Hampshire through high property taxes, Washington through a high sales tax, Nevada through gaming and tourism levies. And the states with the highest income tax rates are frequently the states with the highest salaries for the same role, so comparing rates without comparing the offers attached to them is comparing half the equation.
FICA, and the ceiling most people forget
Federal income tax is not the only federal deduction. Social Security is withheld at 6.2% up to an annual wage base that rises most years, and Medicare at 1.45% with no ceiling at all, plus an Additional Medicare Tax of 0.9% above a threshold that depends on filing status. Your employer matches the first two, which is why self-employment tax is roughly double what an employee sees.
The Social Security wage base produces a genuinely counter-intuitive effect: a high earner's total effective rate can fall slightly once wages pass the base, because 6.2% stops applying to the excess. It is one of the few places in the US system where crossing a threshold makes the marginal rate go down rather than up, and it is why a raise late in the year sometimes nets more than the same raise in January.
Related
Frequently Asked Questions
+Does moving into a higher tax bracket reduce my take-home?
No. US brackets are marginal — only the income inside the higher bracket is taxed at that rate. Earning more always increases your take-home; a raise can never leave you worse off due to brackets.
+What's the difference between marginal and effective tax rate?
Your marginal rate is the rate on your last dollar (your top bracket). Your effective rate is total tax divided by total income, which is always lower because earlier income is taxed at lower rates.
+Does moving into a higher bracket tax all of my income at that rate?
No. Only the income above the threshold is taxed at the higher rate; everything beneath keeps the rate of its own bracket. This is why your effective rate — total tax divided by total income — is always well below your top bracket, and why a raise never leaves you with less than before.
+Why did my effective rate go down after a big raise?
Most likely the Social Security wage base. Social Security is withheld at 6.2% only up to an annual ceiling, so wages above it escape that component. Federal income tax keeps rising, but the FICA portion stops, and on a large enough salary the combined effective rate can dip slightly as a result.
Estimate only — not tax advice. Figures are estimates based on publicly available tax rules and may not reflect your full circumstances. See our methodology & sources (last reviewed June 2026). Always confirm with an official tax authority or a licensed adviser before making decisions.