Start with taxable income
Gross income and taxable income are not the same. Adjustments and either the standard or itemized deduction can reduce the amount that reaches the ordinary-income brackets.
Stack income through the brackets
Fill the lowest bracket first, then the next, until taxable income is allocated. Add the tax from each slice to estimate ordinary federal income tax before credits.
Distinguish marginal and effective rates
The marginal rate applies to the next dollar in the current band. The effective rate is total tax divided by a chosen income measure, so it is normally lower than the top marginal rate.
Example: income crossing a bracket
If $4,000 of taxable income reaches a higher bracket, only that $4,000 receives the higher rate. All lower slices retain their lower rates.
What to check before you decide
- Capital gains and other income can use different rules.
- A calculator cannot determine eligibility for every adjustment, deduction, or credit.
Sources behind this guide
These official and primary sources let you verify rules, definitions, and terms that may change.
IRS — Tax Withholding Estimator↗