How Federal Income Tax Brackets Actually Work
The most misunderstood part of taxes: moving into a higher bracket does not tax all your income at that rate. Here is how marginal rates really work.
The big misconception
Many people fear a raise will "push them into a higher bracket" and leave them with less money. That is not how it works. Tax brackets are marginal — only the income within each bracket is taxed at that bracket's rate.
A simple example
Suppose the 12% bracket ends at $47,150 and the 22% bracket begins above it. If you earn $50,000, only the ~$2,850 above $47,150 is taxed at 22%. The rest is taxed at the lower rates. A raise always leaves you with more take-home pay.
Marginal vs. effective rate
Your marginal rate is the rate on your last dollar (your top bracket). Your effective rate is total tax ÷ total income, and it is always lower. Someone "in the 22% bracket" might have an effective rate closer to 13%.
See your numbers
Our Income Tax Calculator estimates your federal tax and effective rate using current brackets. The Take-Home Pay Calculator adds FICA and state tax for a full picture.
Try the calculators
Income Tax Calculator
Estimate your federal income tax liability for the current tax year.
Take-Home Pay Calculator
Estimate your net pay after federal and state taxes and deductions.
Capital Gains Tax Calculator
Calculate capital gains tax on investments held short-term or long-term.
Self-Employment Tax Calculator
Estimate self-employment tax (SE tax) for freelancers and contractors.