Marginal tax rates: How federal income tax brackets work

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How much does Uncle Sam really get?

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They say nothing in life is certain except death and taxes. But the amount you pay in taxes is anything but certain. There’s this big table of rates and income levels. The IRS uses confusing jargon such as marginal tax rates and income tax brackets. And what’s the difference between heads of household, single filers, and married filing jointly?

Your filing status and taxable income determine which federal income tax brackets apply to you and how much of your income is taxed at each rate.

Federal taxes are calculated based on your filing status.

If you’re unmarried (or legally separated or legally divorced), your filing status is one of two choices:

To be head of household, you must have paid for at least half the cost of keeping a home (rent, mortgage, food, utilities, and so on) for yourself and a qualifying person during the tax year. The IRS has a list defining qualifying persons, including any children, parent(s), or other relatives who meet certain requirements.

If you’re married (even if you’re separated but haven’t legally divorced or legally separated), your filing status is either:

Married taxpayers may choose to file jointly or separately. Some couples choose to file separately because each spouse would only be legally responsible for their own taxes. But according to the IRS, in almost all instances, if you file separate returns, you’ll pay more combined federal tax than you would with a joint return. There’s a list of special rules that apply if you file separate returns, including the loss of several tax credits and the reduction of tax deduction limits.

Once you know your filing status, you can use the tax tables to calculate your taxes.

Federal income taxes are calculated based on “chunks” of your income. The lowest chunk is taxed at the lowest rate. As your income increases, the higher chunks are taxed at higher percentages.

You might hear someone say, “Watch out—if your income goes up, you’ll go into a higher tax bracket!” But that’s not how marginal rates work. Marginal means “on the next dollar earned.” Only the income in the higher chunks will be taxed at the higher rate—not your whole income.

For example, if you’re single and earn $20,000 in the 2026 tax year, the first chunk of up to $12,400 is taxed at 10%. But only the next chunk (from $12,401 to $20,000, or $7,600) is taxed at 12%—not the entire $20,000.

The following table shows the marginal federal tax rates (also called tax brackets) for the 2026 and 2027 tax years.

Because income tax is calculated in chunks, the total tax you pay divided by your income is called your effective tax rate.

Suppose your taxable income in 2026 is $20,000. Two tax rates would apply:

The total tax you would pay is $2,152. Divide that by your income of $20,000 and you get 10.8%. That’s your effective tax rate.

Now, suppose you have $150,000 in taxable income. To calculate your effective tax rate, you’d need to look at four income chunks:

Add those all together for a total tax of $28,598. Divide that by your $150,000 in income, and you get an effective tax rate of 19.1%.

You’ll notice from these examples that by using tax brackets, higher incomes have higher effective tax rates. The U.S. federal income tax is based on this system, which is called a progressive tax system. That means a larger percentage of tax is charged to people making more money than from people with lower incomes.

To fund the services that help with our everyday lives—roads, education, and national security—we all have to pay taxes. The progressive tax system asks those who make more to pay more than people with low incomes. But don’t worry that a raise will cause all your income to be taxed at a higher rate. Only the portion of your taxable income that falls within the higher bracket is taxed at that rate.