Marginal vs Effective Tax Rate Calculator

What is paid into a retirement plan, a health savings account or a deductible individual retirement account before tax is worked out. Every dollar of it comes off adjusted gross income, so it is worth the rate on the next dollar rather than the average rate, and it is the one input a household can usually change before the year ends. It is asked for rather than assumed because a zero is a fact about the pay slip rather than an omission.

Optional. How many people on the return are 65 or over. Each of them adds an additional standard deduction and a separate deduction of 6,000 that is withdrawn as income rises. Leave it blank if nobody is. Two can be claimed only on a joint return, and the count is what drives the rate on the next dollar inside the withdrawal band: each person withdrawn from costs six cents of deduction for every extra dollar earned.

Optional. One flat rate applied to taxable income as a stand-in for state income tax. It is not any state's law: no state bracket, deduction, credit or local tax is modelled, and nine states have no income tax at all, which is why a blank reads as nothing. It is included so that the all-in figures can show roughly where a state sits rather than pretending tax stops at the federal line.

Whether the income is earnings from self-employment rather than wages. A self-employed filer pays both halves of Social Security and Medicare rather than one, on 92.35 percent of net earnings, and deducts half of those two base charges before adjusted gross income. The net effect is a much higher rate on the next dollar and a slightly lower taxable income, and both are shown.

Everything earned in the year before any deduction is taken: wages for an employee, or net earnings from the business for someone self-employed. It is the base every other figure is measured against, and it is the denominator most people mean when they ask what share of their income goes to tax. Enter it before any pre-tax deduction, because the contribution is entered separately below and taken off here.

Which return is being filed. It changes almost everything: the width of every rate layer, the standard deduction, the additional amount for being 65 or over, the income at which the deduction for people 65 and over starts to be withdrawn, and the income at which the extra Medicare rate begins. A separate return is not merely half of a joint one: it gets no deduction for people 65 and over at all, and reaches the top rate at half the joint figure.

Optional. The total of the deductions claimed instead of the standard deduction: state and local tax within its own cap, mortgage interest, charitable gifts and the rest. Leave it blank and the standard deduction is taken, which is what most returns do. Above the income where the top rate begins the 2026 limit reduces whatever is entered here by two thirty-sevenths of the smaller of it and the income above that point, so a large figure is not worth its face value.

Whether Social Security and Medicare are counted in the tax figures. Counting them or not moves the total tax and the all-in rates a long way, so it is a visible switch rather than a hidden assumption. It is on by default because for a household near the median income the payroll tax is larger than the income tax. For an employee, turning it off empties the payroll lines and leaves every federal income tax figure untouched. For someone self-employed it also drops the deduction for half the self-employment tax, so adjusted gross income, taxable income and the federal income tax can rise.

The deduction available without itemizing anything, for this filing status, plus an additional amount for each person 65 or over. It is a floor rather than a choice: a return takes it unless the itemized deductions beat it, and the larger of the two is what the tax is worked out on.

Taxable income multiplied by the flat state rate entered, or nothing when none is. It is a stand-in and not a state's schedule: it uses the federal taxable income, which no state does exactly, and models no state deduction, bracket or credit.

The values across the top of the grid: what is paid into a plan before tax, in steps of a thousand either side of yours and never below nothing. Read a column to hold the contribution fixed and vary the income. The middle entry is your own contribution, and the gap between two adjacent cells on a row is what a thousand more set aside is worth in tax.

The Social Security part of the payroll tax: 6.2 percent of earnings up to the wage base and nothing above it, doubled for someone self-employed and charged on 92.35 percent of their net earnings. Because it stops at the wage base, it is the reason a high earner's all-in rate on the next dollar can be lower than a middle earner's.

Reads OK, or explains why the inputs are not valid or why the answer deserves a second look.

Social Security and Medicare added together. It is reported separately because for a household near the median income it is the larger of the two federal taxes.

The separate deduction of 6,000 for each person 65 or over, which came in for 2025 and runs to 2028. It is available whichever deduction route is taken, and it is withdrawn at six cents for every dollar of income above the threshold, applied to each person's own 6,000 rather than to the pooled amount. That is why a couple loses it twice as fast as one person, and why the rate on their next dollar is twelve percent above their bracket rate while it lasts.

Machinery, and NOT an input. The same for the column axis: Excel substitutes into it while filling the grid, and the rest of the time it mirrors the pre-tax contribution.

What is left of the income entered after all the tax above and after the money put into a plan before tax. The contribution is not tax and has not gone anywhere, which is why it is subtracted separately rather than counted as a cost; if more is put into a plan than is earned, this figure is reported negative rather than clamped.

What the rate schedule is actually applied to: adjusted gross income less the deduction taken and less the deduction for people 65 and over. It is the smallest of the three bases and therefore the one that makes an effective rate look highest, which is worth knowing when an effective rate is quoted without its base.

The federal income tax, the payroll tax and the state stand-in added together. This is the numerator of the all-in effective rate, and the figure to use where a single total is wanted rather than a breakdown.

The body of the grid: the federal income tax on the same return, worked out again for every combination of the two axes. One hundred and twenty-one cells, each one the whole calculation run from the beginning. It is a component of the grid rather than a result on its own.

Machinery. Excel requires the formula being tabulated to sit in the grid's top-left corner, where it means nothing to a reader, so it is formatted away. It holds Federal_Tax.

The values down the left of the grid: the income before any deduction, in steps of ten thousand either side of yours and never below nothing. Read a row to hold the income fixed and vary what is put away before tax. The middle entry is your own income.

Machinery, and NOT an input. Excel substitutes each value from the row axis into this cell while it fills the grid; the rest of the time it mirrors the income entered. Change the income above, never this: the axis is derived from it, so editing the mirror moves the axis while the grid walks and the grid comes out meaningless.

Which of the two routes the return takes. It says itemized only when the itemized deductions after the limit beat the standard deduction; a tie goes to the standard deduction, because there is nothing to gain from itemizing for the same answer.

The larger of the standard deduction and the itemized deductions after the limit. This is what actually comes off adjusted gross income, and comparing it with the two figures above says whether itemizing was worth the paperwork.

The federal income tax divided by adjusted gross income.

One row for each layer of the rate schedule your taxable income actually reaches: the rate that layer charges, the part of your income that falls inside it, and the tax the layer produces. Layers you do not reach are blank rather than zero. It is the clearest answer to the commonest misunderstanding about income tax, which is that reaching a bracket taxes everything at that rate.

Adjusted gross income: everything earned, less what was put into a plan before tax, and less half the self-employment tax for someone self-employed. It is the figure most of the tax code measures thresholds against, and it is the middle of the three bases the effective rates are reported over.

All that tax divided by the income entered before any deduction. It is the broadest honest answer to what share of earnings goes to tax, and it is usually much higher than the federal income tax rate alone because payroll tax is charged from the first dollar with no deduction in front of it.

What one more dollar of earnings really costs: the rate on the next dollar after any withdrawal, plus the payroll rate that still applies at this income, plus the state rate. Above the Social Security wage base the payroll part drops sharply, and above the extra Medicare threshold it rises a little, so this figure does not simply climb with income.

The federal income tax divided by everything earned before any deduction. This is the smallest of the three and the one that answers the question most people are really asking, which is what share of what they earned went to income tax.

The rate the schedule would charge on one more dollar of taxable income. This is the number people mean when they say what bracket they are in, and it is almost never the rate they pay on their income as a whole. An income sitting exactly on a bracket line has its next dollar taxed at the HIGHER rate, because that dollar is the first one in the layer above, and the room reported below is then the whole width of that layer.

What the next dollar earned really costs, once a deduction that is being withdrawn is counted. While the deduction for people 65 and over is phasing out, each extra dollar of income also removes six cents of deduction for each qualifying person, so 1.06 or 1.12 dollars are taxed rather than one. Outside that band it equals the bracket rate. It does not include payroll tax or state tax; the all-in figure below does.

The Medicare part of the payroll tax, with no ceiling at all: 1.45 percent of every dollar of earnings, doubled for someone self-employed, plus an extra 0.9 percent of the earnings above a threshold that has never been adjusted for inflation and so catches more households every year. The extra rate is the employee's alone and is not deducted by a self-employed filer.

What the itemized deductions are actually worth after the 2026 limit. Above the income at which the top rate begins the limit takes two thirty-sevenths of the smaller of the deductions and the income above that point, which is why a large figure entered can come out noticeably smaller here. Below that income nothing is taken and this equals what was entered.

The federal income tax divided by taxable income. This is the largest of the three effective rates, because taxable income is the smallest base. Quoting it beside a rate on another base is how the same household ends up with two different answers.

The federal income tax on that taxable income, and nothing else: no payroll tax, no state tax and no credits. It is the sum of the layer-by-layer rows below, so a reader can see exactly where each dollar of it came from.

How many more dollars of taxable income would fit before the next layer of the schedule starts charging its higher rate. It is the number to look at before deciding whether one more dollar of income, or one more dollar into a plan, crosses a line. In the top layer it reads nothing, because there is no layer above it.