Authoritative Data Source and Methodology

This calculator uses the 2024 U.S. Federal Income Tax Brackets, as defined by the IRS in Revenue Procedure 2023-48. These rates apply to income earned in 2024 (the tax return you file in 2025).

All calculations are based strictly on the formulas and data provided by this source. This calculator does not account for state taxes, local taxes, capital gains, or tax credits, which can lower your final tax bill.

The Formula Explained

The U.S. federal income tax system is **progressive**. This means you pay different rates on different "portions" (or brackets) of your income. Your Marginal Tax Rate is simply the tax rate applied to your *highest* portion of income.

Your Effective Tax Rate, however, is your *average* tax rate. It provides a clearer picture of your total tax burden and is calculated with the following formula:

$$ \text{Effective Tax Rate} = \frac{\text{Total Tax Owed}}{\text{Taxable Income}} \times 100\% $$

Glossary of Variables

Filing Status
Your tax-filing category (e.g., Single, Married Filing Jointly). Your status determines the income thresholds for each tax bracket.
Taxable Income
Your gross income *after* all eligible deductions (such as the standard deduction or itemized deductions). This is the amount your tax is actually calculated on, not your total salary.
Marginal Tax Rate
The tax rate you pay on your *next dollar* of income. It corresponds to the highest tax bracket your income falls into.
Effective Tax Rate
Your average tax rate. It is your Total Tax Owed divided by your Taxable Income. This rate is almost always lower than your marginal rate.
Total Tax Owed
The total amount of federal income tax you are liable for, calculated by applying the progressive rates across all your income brackets.

How It Works: A Step-by-Step Example

Let's calculate the tax for a **Single** filer with **$50,000** in taxable income.

We use the 2024 brackets for a Single filer:

  • 10% on income up to $11,600
  • 12% on income over $11,600 up to $47,150
  • 22% on income over $47,150 up to $100,525
  • ...and so on.
  1. Bracket 1 (10%): The first $11,600 is taxed at 10%.
    $11,600 \times 0.10 = \$1,160$
  2. Bracket 2 (12%): The income between $11,600 and $47,150 is taxed at 12%.
    ($47,150 - \$11,600) \times 0.12 = \$35,550 \times 0.12 = \$4,266$
  3. Bracket 3 (22%): The remaining income over $47,150 is taxed at 22%.
    ($50,000 - \$47,150) \times 0.22 = \$2,850 \times 0.22 = \$627$

Results:

  • Total Tax Owed: $1,160 + $4,266 + $627 = $6,053
  • Marginal Tax Rate: 22% (the highest rate applied)
  • Effective Tax Rate: ($6,053 / $50,000) = 12.11%

Frequently Asked Questions (FAQ)

What's the difference between marginal and effective tax rate?

Your marginal rate is the tax you pay on your *last dollar earned* (your highest bracket). Your effective rate is your *average tax rate* (total tax divided by total taxable income). Your effective rate is a more accurate measure of your overall tax burden.

Why is my marginal rate higher than my effective rate?

This is the essence of a progressive tax system. You only pay the highest rate (your marginal rate) on the portion of your income that falls into that top bracket. The rest of your income is taxed at lower rates, pulling your average (effective) rate down.

Does this calculator include state or local taxes?

No. This calculator is for **U.S. Federal Income Tax only**. It does not include state/local taxes, Social Security (FICA), or Medicare, which are calculated separately.

What is 'taxable income'? How is it different from my salary?

Your salary or gross income is your total pay *before* any deductions. Your taxable income is your income *after* you subtract deductions (like the standard deduction or itemized deductions). Your tax is calculated on this lower, taxable amount. This calculator assumes you have already determined your taxable income.

What about capital gains or dividends?

This calculator is for ordinary income (like wages, salaries, and business income). Long-term capital gains and qualified dividends are taxed at different, lower rates and are not included in this calculation.

Tool developed by Ugo Candido. Finance content reviewed by the CalcDomain Editorial Board.
Last accuracy review for 2024 tax brackets: