Your marginal tax rate is the rate on your next dollar of income, which is the tax bracket your top dollars fall into. Your effective tax rate is your total tax divided by your income, the average rate across all your dollars. Because US federal income tax is progressive, the effective rate is always lower than the marginal rate. A single filer earning $85,000 in 2026 is in the 22% bracket, but pays $9,870 of federal income tax, an effective rate of about 11.6% of gross income.
The two formulas
You can divide by gross income or by taxable income; both are used. Dividing by gross income answers “what share of my pay goes to federal income tax?” Dividing by taxable income shows the average bracket rate after deductions.
2026 federal brackets
These apply to taxable income (income after the standard or itemized deduction), per IRS Rev. Proc. 2025-32:
| Rate | Single: taxable income over | Married filing jointly: over |
|---|---|---|
| 10% | $0 | $0 |
| 12% | $12,400 | $24,800 |
| 22% | $50,400 | $100,800 |
| 24% | $105,700 | $211,400 |
| 32% | $201,775 | $403,550 |
| 35% | $256,225 | $512,450 |
| 37% | $640,600 | $768,700 |
The 2026 standard deduction is $16,100 for single filers, $32,200 for joint filers and $24,150 for heads of household.
Worked example: $85,000 single filer
- Taxable income: $85,000 − $16,100 standard deduction = $68,900
- Tax by bracket:
- 10% on the first $12,400 = $1,240
- 12% on $12,400 to $50,400 ($38,000) = $4,560
- 22% on $50,400 to $68,900 ($18,500) = $4,070
- Total federal income tax: $9,870
- Marginal rate: 22%
- Effective rate: $9,870 ÷ $85,000 = 11.61% of gross, or $9,870 ÷ $68,900 = 14.33% of taxable income
Only $18,500 of this person’s income is taxed at 22%. The first $16,100 is not taxed at all, thanks to the standard deduction. The income tax calculator shows this bracket-by-bracket breakdown for any income.
Effective rates across incomes
Single filers, 2026, wages only, standard deduction:
| Gross income | Taxable income | Federal income tax | Marginal rate | Effective rate (of gross) |
|---|---|---|---|---|
| $40,000 | $23,900 | $2,620 | 12% | 6.55% |
| $60,000 | $43,900 | $5,020 | 12% | 8.37% |
| $85,000 | $68,900 | $9,870 | 22% | 11.61% |
| $120,000 | $103,900 | $17,570 | 22% | 14.64% |
| $200,000 | $183,900 | $36,734 | 24% | 18.37% |
| $400,000 | $383,900 | $103,134 | 35% | 25.78% |
And for married couples filing jointly:
| Gross income | Taxable income | Federal income tax | Marginal rate | Effective rate |
|---|---|---|---|---|
| $100,000 | $67,800 | $7,640 | 12% | 7.64% |
| $150,000 | $117,800 | $15,340 | 22% | 10.23% |
| $250,000 | $217,800 | $37,468 | 24% | 14.99% |
Even at $400,000, a single filer’s effective federal rate is about 26%, well below the 35% bracket.
How credits change the picture
Tax credits come off the tax itself, so they lower the effective rate without changing the marginal rate. Take the married couple earning $150,000 with two qualifying children. The 2026 child tax credit is $2,200 per child, so their $15,340 of tax drops by $4,400 to $10,940. Their effective rate falls from 10.23% to 7.29%, yet their next dollar of income is still taxed at 22%. That is why two households with the same income and bracket can have very different effective rates, and why the effective rate is a better measure of overall tax burden while the marginal rate is the one to use for decisions about the next dollar.
The bracket myth
A common worry is that a raise will “push you into a higher bracket” and leave you worse off. It cannot, under the bracket system itself. Moving from $85,000 to $90,000:
- The extra $5,000 is all in the 22% bracket: $1,100 more federal income tax
- FICA on the raise: $5,000 × 7.65% = $382.50
- You keep $3,517.50 of the $5,000 before state tax
Only the dollars above each threshold are taxed at the higher rate; dollars below it keep their lower rates. The paycheck calculator shows how a raise flows through to net pay.
When to use each rate
Use the marginal rate for decisions at the edge:
- Deductions. A $1,000 deduction or traditional 401(k) contribution saves $220 in the 22% bracket. See Roth vs. traditional IRA for how this shapes retirement savings.
- Extra income. Overtime, side gigs and bonuses are taxed at your marginal rate (bonus withholding at a flat 22% is only an estimate; the bonus tax calculator shows the difference).
- Comparing taxable and tax-free investments. A 4% municipal bond yield equals about 5.13% taxable in the 22% bracket (4% ÷ 0.78).
Use the effective rate for the big picture:
- Budgeting and estimating annual tax
- Comparing your overall tax burden year to year
- Understanding how much of your income actually goes to federal tax
Your true marginal rate may be higher
The federal bracket is not the only thing that changes when income rises:
- FICA: 7.65% on wages up to the 2026 Social Security wage base of $184,500, then 1.45% (2.35% above $200,000).
- State income tax: from 0% in states without a wage tax to more than 10% at the top in a few states; see the state income tax calculator.
- Phase-outs: credits and deductions that shrink as income rises, such as the child tax credit above $200,000 ($400,000 joint) or the 2025–2028 senior deduction above $75,000 ($150,000 joint), effectively raise the marginal rate within the phase-out range.
- Benefit cliffs: health insurance subsidies, student aid and some state programs can drop sharply at certain income levels.
For a $85,000 earner, the combined federal marginal rate on wages is 22% + 7.65% = 29.65% before state tax, while the combined effective rate including FICA is about 19.3%.
Quick steps to find your own rates
- Start with gross income and subtract pre-tax deductions (traditional 401(k), HSA, cafeteria plan items).
- Subtract the standard deduction or your itemized deductions to get taxable income.
- Find the bracket containing your last dollar: that is your marginal rate.
- Apply each bracket’s rate to the slice of income inside it and add them up.
- Subtract credits, then divide total tax by gross income for the effective rate.
To see these numbers inside a paycheck, read how to calculate net pay, and to estimate what you will owe or get back at filing time, try the tax refund estimator.
This guide simplifies federal income tax for education and is not tax advice. Figures use 2026 IRS parameters for wage income with the standard deduction; your credits, other income and state taxes will change the results.
Frequently asked questions
Can a raise put me in a higher bracket and lower my take-home pay?
No. Only the dollars above a bracket threshold are taxed at the higher rate. A $5,000 raise for a single filer in the 22% bracket adds $1,100 of federal income tax and $382.50 of FICA, leaving $3,517.50 more in take-home pay. Rare exceptions involve benefit cliffs, not tax brackets.
What is my effective tax rate if I earn $85,000?
For a single filer in 2026 using the standard deduction, federal income tax on $85,000 of wages is $9,870, an effective rate of about 11.6% of gross income. The marginal rate is 22%.
Should I use the marginal or effective rate to evaluate a deduction?
The marginal rate. A $1,000 deduction removes $1,000 from the top of your taxable income, so in the 22% bracket it saves $220. Credits are different: a $1,000 credit reduces tax by the full $1,000.
Does the effective rate include Social Security and Medicare?
Not in the usual definition, which covers federal income tax only. Adding the 7.65% employee FICA share gives a fuller picture of the tax on wages; for the $85,000 example, the combined effective rate is about 19.3%.
Are capital gains taxed at my marginal rate?
Short-term gains (assets held one year or less) are taxed as ordinary income at your marginal rate. Long-term gains and qualified dividends use separate 0%, 15% and 20% rates that depend on taxable income.