How progressive tax brackets work
A common worry is that earning a little more will push you into a higher bracket and shrink your take-home pay. That is not how it works. Only the income that falls inside a given bracket is taxed at that bracket rate — the rest keeps its lower rates.
So your first dollars are taxed at 10%, the next slice at 12%, and so on up the ladder. The tool walks each slice of your taxable income through its bracket and adds the pieces together to reach the total tax.
Marginal versus effective rate
The marginal rate is the rate on your last dollar earned — the top bracket your income reaches. It matters for deciding whether extra income or a deduction is worthwhile.
The effective rate is the total tax divided by your taxable income: the actual average share you pay. Because the lower brackets dilute the top rate, the effective rate is always lower than the marginal rate. Confusing the two is the source of most "brackets" myths.
Reading the charts
The donut chart splits your taxable income into the portion that goes to federal tax and the portion you keep after tax. The bar chart shows the dollars paid within each bracket you reach, which makes the progressive structure concrete: the lower brackets often contribute a surprising amount of the total even when your marginal rate is high.
What this estimate excludes
This works from taxable income, meaning you should already have subtracted the standard or itemized deduction. It covers federal ordinary-income tax only and ignores tax credits, the alternative minimum tax, the additional Medicare tax, capital-gains rates, and any state or local income tax. Your final bill can be meaningfully lower once credits are applied.
Formula
tax = Σ over brackets of (min(income, top) − bottom) × rate, for brackets where income > bottomFrequently asked questions
- Is this my actual tax bill?
- It is an estimate of federal income tax on taxable income using 2024 brackets. It excludes credits, the alternative minimum tax, state tax and payroll taxes.