Two rates, two different questions
The marginal rate answers what happens to my next dollar? The effective rate answers what happened to all my dollars? Both come from the same brackets; they differ because the brackets are progressive and the standard deduction shields the first slice of income entirely.
effective rate = total tax ÷ gross income · marginal rate = the bracket of your next taxable dollarWorked example · $95,000, single filer, 2026
- Federal income tax of $12,070 plus $7,268 FICA = $19,338 total tax.
- Effective rate: $19,338 ÷ $95,000 = 20.4%.
- Yet the marginal federal bracket is 22% — the rate on the next dollar, not the average on all of them.
Why the gap narrows as income rises
At low incomes the deduction shields a large share of pay, so the effective rate sits far below the bracket. As income grows, more dollars land in the upper bands and the average climbs toward — but never reaches — the marginal rate. Watching the two numbers as you move the salary slider makes the progressive structure clearer than any table.
Where to go deeper
The band-by-band working behind these rates is open by default in the result panel. For the income-tax figure on its own, use the federal income tax calculator; for what the whole deduction stack leaves in your account, the take-home pay calculator finishes the story.
What’s included, and what isn’t
Every figure this calculator produces is an estimate. Here is exactly what it accounts for, and what it does not.
What’s included
- Federal income tax, using the published brackets and standard deduction for your filing status.
- Employee Social Security at 6.2%, capped at the annual wage base.
- Employee Medicare at 1.45%, plus Additional Medicare Tax where it applies.
- Any pre-tax contributions you enter, applied to federal taxable income only.
- State income tax for the nine states that levy none on wages — a verified zero, not an omission.
- Conversion of the annual result into monthly, weekly and per-paycheck equivalents.
What’s not included
- State income tax outside the states listed as levying none on wages.
- County, city and other local income taxes.
- Tax credits, itemised deductions and above-the-line adjustments.
- Employer benefits, insurance premiums and post-tax deductions.
- Form W-4 adjustments such as dependants, other income or extra withholding.
- Bonuses, commission and overtime, which payroll often withholds at a separate supplemental rate.
- Multiple jobs, a working spouse's income, and mid-year pay changes.
What this calculator assumes
- Uses the federal standard deduction for the selected filing status and tax year.
- Assumes W-2 employment at one job for the full calendar year.
- Pre-tax contributions reduce federal taxable income but not Social Security or Medicare wages.
- Social Security stops at the $184,500 wage base for 2026.
- Additional Medicare Tax follows the taxpayer's liability threshold for their filing status.
- The effective rate divides your total estimated tax — federal, FICA and any state amount — by gross income.
- The marginal rate is the federal bracket your next dollar of taxable income falls into.
Sources
Every rate and threshold above is transcribed from a primary source and re-checked on the date shown.
Frequently asked questions
What is an effective tax rate?
Total tax divided by gross income — the share of everything you earned that went to tax. This calculator includes federal income tax, Social Security and Medicare in that total, so it reflects what actually leaves your pay, not just the income-tax line.
What is the difference between effective and marginal tax rates?
The marginal rate is the bracket your next dollar of taxable income falls into. The effective rate is the average across all your dollars — always lower, because your first dollars were taxed in the lower bands and some were not taxed at all thanks to the standard deduction.
Why is my effective rate so much lower than my bracket?
Two reasons stack: the standard deduction removes the first slice of income from tax entirely, and the brackets below yours charge less than your top rate. Someone 'in the 22% bracket' typically pays a much smaller share of gross income in federal income tax.
Which rate should I use for decisions?
Marginal, for anything incremental: a raise, a side project, a traditional 401(k) contribution — each is taxed (or saved) at the margin. Effective, for describing your overall burden or comparing years. Using the marginal rate to estimate your total tax dramatically overstates it.
Does a raise into a higher bracket reduce my take-home pay?
No. Only the dollars above the new threshold are taxed at the higher rate; every dollar below keeps its old treatment. A raise can never shrink your after-tax income through the brackets alone — the progressive structure makes that impossible.