How to Calculate US Income Tax

What is US Income Tax?

US federal income tax uses progressive brackets. Higher income is taxed at higher rates — but only the income above each threshold gets the higher rate, not all your income.

Formula

Tax = (Income − Standard deduction) × Marginal tax rate (progressive brackets); Effective rate = Total tax / Total income × 100%

Income: Adjusted gross income (AGI) (Currency)
StandardDed: Standard deduction (Currency ($13.85k single 2024))
Taxable: Taxable income (Currency)
Tax: Federal income tax (Currency)

Step-by-Step Guide

1Taxable income = Gross − standard deduction ($14,600 single 2024)
2Apply each bracket progressively
3Effective rate = Total tax / Gross (< marginal rate)
4State income tax is additional (0–13% by state)

Worked Examples

Input

$75,000 single filer 2024

Result

Taxable ~$60,400; federal tax ≈ $8,768; effective rate ~11.7%

Frequently Asked Questions

What's the difference between marginal and effective rate?

Marginal: your tax rate on the NEXT dollar earned (22% if in 22% bracket). Effective: total tax / total income (typically 10–20%). Your marginal rate is higher; don't confuse them.

Should I itemize or take standard deduction?

2024: standard $13,850 single, $27,700 married. Itemize if deductions > standard (mortgage interest, state taxes capped $10k, charitable). Most itemize now post-TCJA.

What deductions reduce AGI?

Above-the-line: 401k, IRA contributions, student loan interest, HSA, etc. These reduce AGI directly. Reduce tax + FICA. Itemized deductions then further reduce taxable income.

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