Salary & Tax Calculator

Federal income taxes use a progressive bracket system. Your income is divided into ranges, each taxed at an increasing rate. Only the income within each bracket is taxed at that bracket's rate, not your entire income.

The standard deduction is a fixed amount subtracted from your gross income before taxes are calculated. For 2024, it's $14,600 for single filers, $29,200 for married filing jointly, and $21,900 for head of household.

The effective tax rate is your total tax divided by your gross income. It's lower than your marginal (highest) tax bracket because only a portion of your income is taxed at the highest rate.

Your marginal tax rate is the rate applied to your last dollar of income — your highest bracket. Your effective tax rate is the average rate across all your income. For example, a $100,000 earner may have a 24% marginal rate but only a 17% effective rate.

Pre-tax deductions (401k contributions, health insurance premiums) reduce your taxable income before taxes are calculated, lowering your tax bill. Post-tax deductions (Roth 401k, union dues) come out after taxes. Pre-tax deductions provide an immediate tax benefit.

Tax deductions reduce your taxable income (saving you money at your marginal rate), while tax credits directly reduce your tax bill dollar-for-dollar. A $1,000 credit saves you $1,000, while a $1,000 deduction saves you $220-370 depending on your tax bracket.

Short-term capital gains (assets held less than one year) are taxed as ordinary income. Long-term gains (held over one year) are taxed at preferential rates: 0%, 15%, or 20% depending on your income. This is why holding investments long-term is generally more tax-efficient.

FICA taxes fund Social Security (6.2% on income up to $168,600 in 2024) and Medicare (1.45% on all income, plus 0.9% surcharge above $200,000). These are separate from federal income tax and are automatically withheld from your paycheck.