How a progressive tax system actually works
Picture your income filled into stacked buckets, each with its own rate — the lowest bucket taxed lightly, each bucket above it taxed a bit more, but only for the income that falls inside it. Your total tax is the sum across every bucket your income reaches, which is why your effective rate (tax ÷ income) always lands well below your top marginal rate.
From tax rate to take-home pay
Once you have an effective rate estimate here, plug it into the Take-Home Pay Calculator to see your actual paycheck after tax and pre-tax deductions like retirement contributions.
Frequently asked questions
What tax brackets does this use?
Illustrative example brackets modeled on recent US federal single-filer rates (10% to 37%), for federal income tax only — no state or local tax, no deductions or credits beyond what you enter as taxable income. Brackets change yearly for inflation, so check IRS.gov or a tax professional for exact current figures.
What is the difference between marginal and effective tax rate?
Your marginal rate is what you pay on your last dollar of income — the highest bracket you reach. Your effective rate is your total tax divided by your total income — always lower than your marginal rate, because only income above each threshold is taxed at that threshold's rate.
Why isn't all my income taxed at my top bracket?
The US uses a progressive system: each bracket only applies to the slice of income within that range. Moving into a higher bracket only raises the rate on income above that threshold, not your entire income — a common misconception.
Should I enter gross or taxable income?
Enter taxable income — your income after deductions (standard or itemized) and any pre-tax contributions. If you're not sure, gross income minus the standard deduction is a reasonable rough estimate.
Last updated: June 2026