What are Tax Brackets?

Tax brackets divide your taxable income into slices, each taxed at its own rate. Earning more moves the additional income into a higher bracket. It does not raise the rate on the income below that threshold.

That distinction is the one most worth getting right. A raise that takes you into the 24% bracket does not tax your whole income at 24%, and the bracket structure alone will never leave you with less after tax than before. Income-tested benefits can, which is a separate mechanism covered below.

How Tax Brackets Work

Take a single filer with $95,000 of taxable income in 2026. The tax is built one slice at a time:

• The first $12,400 is taxed at 10%, which is $1,240
• The next $38,000, up to $50,400, is taxed at 12%, which is $4,560
• The remaining $44,600 is taxed at 22%, which is $9,812

Total federal income tax is $15,612. The top bracket reached is 22%, so that is the marginal rate, the rate applying to the next dollar earned. But the tax actually paid works out to 16.4% of income, which is the effective rate. Both numbers describe the same taxpayer and answer different questions.

Federal brackets are also only one layer. Most states levy their own income tax, some at flat rates and some with brackets of their own, and payroll taxes for Social Security and Medicare apply separately to earned income. You can see how the layers combine across a full plan on the tax analytics page, which breaks a projected year into federal, state, and local components.

2026 Federal Income Tax Brackets

These apply to taxable income, meaning income after deductions, for the 2026 tax year.

Source: IRS Revenue Procedure 2025-32. There were seven brackets before 2018 as well; what the Tax Cuts and Jobs Act changed were the rates themselves, and the One Big Beautiful Bill Act made those current rates permanent in July 2025, so they carry forward rather than reverting to the higher pre-2018 schedule. The dollar thresholds are still adjusted for inflation each year.

What Tax Bracket Am I In?

Your bracket is set by taxable income, not by salary, and the gap between them is usually large. Subtract your deductions from total income first.

A single filer earning $111,100 who takes the 2026 standard deduction of $16,100 has $95,000 of taxable income, which lands in the 22% bracket. Someone quoting their gross salary would have guessed 24% and been wrong about the rate on their next dollar.

Pre-tax retirement contributions come out before this calculation, which is why a 401(k) contribution reduces tax at your marginal rate rather than your average one. A contribution large enough to cross a bracket boundary saves at the lower rate on the part that falls below it.

Marginal and Effective Rates Are Different Numbers

The bracket you land in is your marginal rate: what the next dollar of ordinary income costs. Your effective rate is total tax divided by income, and it is lower whenever your income spans more than one bracket, because the lower slices keep their lower rates.

Use the marginal rate for decisions at the edge, such as whether to make a pre-tax or Roth contribution, take on extra work, or convert part of a traditional balance. Use the effective rate to understand the overall burden. Reaching for the wrong one is how people conclude that a raise is not worth taking.

Frequently Asked Questions

What are the 2026 tax brackets? Seven rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For a single filer the 10% rate applies to the first $12,400 of taxable income and the 37% rate begins above $640,600. The married filing jointly thresholds are double the single figures through the 32% bracket, then diverge.

Does moving into a higher tax bracket mean all my income is taxed at that rate? No. Only the income above the threshold is taxed at the higher rate. A single filer with $105,800 of taxable income pays 24% on $100 of it, not on the whole amount.

Can a raise ever leave me worse off? Not through the bracket structure itself, since only the additional income is taxed at the higher rate. Sharp losses at a specific income level come from income-tested benefits rather than brackets. Marketplace premium tax credits are the clearest case: they shrink as income rises and, under current law, stop above an income ceiling, so income near that ceiling carries a much higher real cost than its bracket suggests.

Is my tax bracket based on gross or taxable income? Taxable income, after deductions. The standard deduction alone is $16,100 for a single filer in 2026 and $32,200 for a married couple filing jointly, so taxable income sits well below gross pay for most households.