US · Income tax
How US tax brackets actually work: marginal and effective rates for 2026
Moving into a higher tax bracket never means taking home less. Here's how the 2026 federal brackets work, with worked examples, and why your effective rate is far lower than your bracket.
By Stuart Mathieson · · 6 min read
I live in Scotland, so the US tax system isn't one I file under myself. I built the US calculators on this site from the IRS's own publications, and the question that comes up most often is some version of "will this pay rise push me into a higher bracket and leave me worse off?"
The short answer is no. Federal income tax in the US is progressive: each rate only applies to the slice of income inside its bracket. Once that clicks, a lot of tax worry goes away. This guide uses the figures for tax year 2026 - the return most people will file in early 2027.
Step one: the standard deduction
Brackets apply to taxable income, not to your salary. Before the brackets come into it, most people subtract the standard deduction - a flat amount of income that isn't taxed at all.
| Filing status | Standard deduction |
|---|---|
| Single | $16,100 |
| Married filing jointly | $32,200 |
| Head of household | $24,150 |
Pre-tax contributions such as a traditional 401(k) come off before this, too. So a single person earning $60,000 with no other deductions has taxable income of $60,000 − $16,100 = $43,900.
The 2026 brackets
There are seven rates, from 10% to 37%. The dollar limits depend on your filing status and are adjusted for inflation each year.
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 10% | Up to $12,400 | Up to $24,800 | Up to $17,700 |
| 12% | $12,401 to $50,400 | $24,801 to $100,800 | $17,701 to $67,450 |
| 22% | $50,401 to $105,700 | $100,801 to $211,400 | $67,451 to $105,700 |
| 24% | $105,701 to $201,775 | $211,401 to $403,550 | $105,701 to $201,750 |
| 32% | $201,776 to $256,225 | $403,551 to $512,450 | $201,751 to $256,200 |
| 35% | $256,226 to $640,600 | $512,451 to $768,700 | $256,201 to $640,600 |
| 37% | Over $640,600 | Over $768,700 | Over $640,600 |
Your "bracket" is just the rate on the last dollar you earn. It tells you nothing about the tax on all the other dollars.
A worked example: $85,000, single
Take a single filer earning $85,000 in 2026. Taxable income after the standard deduction is $68,900, and it's taxed in slices:
| Slice of taxable income | Rate | Tax |
|---|---|---|
| First $12,400 | 10% | $1,240 |
| Next $38,000 | 12% | $4,560 |
| Last $18,500 | 22% | $4,070 |
| Total | $9,870 |
This person is "in the 22% bracket", but only $18,500 of their income is taxed at 22%. Their total federal income tax of $9,870 is 11.6% of their $85,000 salary.
Marginal rate versus effective rate
Those two numbers are worth keeping apart:
- Marginal rate - the rate on your next dollar. It's what matters when you're weighing a raise, overtime or a side job.
- Effective rate - total tax divided by total income. It's what you actually pay overall.
| Income and status | Taxable income | Federal tax | Effective rate | Marginal rate |
|---|---|---|---|---|
| $40,000, single | $23,900 | $2,620 | 6.6% | 12% |
| $60,000, single | $43,900 | $5,020 | 8.4% | 12% |
| $85,000, single | $68,900 | $9,870 | 11.6% | 22% |
| $75,000, head of household | $50,850 | $5,748 | 7.7% | 12% |
| $150,000, married filing jointly | $117,800 | $15,340 | 10.2% | 22% |
| $150,000, single | $133,900 | $24,734 | 16.5% | 24% |
| $250,000, single | $233,900 | $51,304 | 20.5% | 32% |
The effective rate climbs gently, and it's always well below the marginal rate. Even at $250,000, a single filer in the 32% bracket pays about a fifth of their income in federal income tax.
Notice the two $150,000 rows. A married couple filing jointly gets brackets roughly twice as wide as a single filer's, so the same income is taxed noticeably less - $15,340 against $24,734.
The "higher bracket" myth
Here's the scenario people worry about. A single filer earning $66,000 gets a $2,000 raise to $68,000. That takes their taxable income from $49,900 to $51,900, across the line where 12% becomes 22%.
What actually happens:
- The first $500 of the raise is still in the 12% bracket: $60 of tax.
- The other $1,500 is taxed at 22%: $330.
- Federal income tax goes up by $390 in total, from $5,740 to $6,130.
They keep $1,610 of the $2,000 before payroll taxes. The income they were already earning is taxed exactly as before. There's no point on the federal brackets where earning one more dollar leaves you with less.
The real cliffs in the US system are elsewhere. Some credits and benefits - the Earned Income Tax Credit, health insurance subsidies, some state programmes - shrink or stop as income rises, and those can genuinely produce very high marginal rates over short ranges. But that's the credits, not the brackets.
What the brackets don't include
Federal income tax is only one line on a payslip. Your take-home pay also loses:
- Social Security and Medicare (FICA) - 7.65% on most wages, with no standard deduction. On $85,000 that's $6,502.50, so payroll tax often costs lower earners more than income tax does. I go through it in understanding your US paycheck.
- State and local income tax - set by each state, and sometimes your city, with their own brackets and deductions. A few states, such as Texas and Florida, don't tax wages at all; others take several percent.
- Credits - the Child Tax Credit and others come off the tax bill itself, after the brackets, so two people with the same income can owe very different amounts.
If you're self-employed, there's a further 15.3% self-employment tax on top of the brackets, covered in the self-employment tax guide.
Using the brackets to make decisions
Your marginal rate is the useful number for "what if" questions:
- Traditional 401(k) contributions save you tax at your marginal rate. At 22%, putting $1,000 in costs $780 of take-home pay (before any state tax saving).
- Overtime and bonuses are taxed at your marginal rate in the end, even if withholding on a bonus cheque looks heavier at the time. Any over-withholding comes back as a refund when you file.
- Deductions are worth your marginal rate times the deduction; credits are worth their full amount. A $1,000 credit beats a $1,000 deduction for almost everyone.
If you live in the UK too, the idea is the same - only the slice above each threshold is taxed at the higher rate - which I cover from the other side in Scottish income tax explained.
Run your own numbers
My US paycheck calculator works through the standard deduction, the brackets for your filing status, FICA, pre-tax 401(k) and health contributions, and an estimate for state tax, and shows your marginal and effective rates. It covers the federal rules for a typical salaried employee; if you itemise, have significant investment income or claim several credits, your actual return will differ, and a tax professional or the IRS's own tools are the place to check.
Run your own numbers
Written by Stuart Mathieson
I'm a freelance web developer based in Scotland, and I build and maintain every calculator on this site myself. I check the figures in these guides against HMRC, the IRS and the other official sources listed below, but I'm not a tax adviser - for decisions that matter, talk to one. More about me.