Federal income tax is the tax the US government collects on the money you earn, whether that's from a paycheck, freelance work, or investments. It's calculated once a year on your tax return, separate from the smaller amounts your employer withholds from each paycheck throughout the year.
Your income isn't taxed all at once
The federal system uses progressive tax brackets. That means different slices of your income are taxed at different rates — the first slice at the lowest rate, the next slice at a higher rate, and so on, only for a taxpayer whose income reaches that high. Nobody pays one flat rate on their entire income. Here are the 2026 brackets for a Single filer:
| Income range | Rate |
|---|---|
| $0 – $12,400 | 10% |
| $12,400 – $50,400 | 12% |
| $50,400 – $105,700 | 22% |
| $105,700 – $201,775 | 24% |
| $201,775 – $256,225 | 32% |
| $256,225 – $640,600 | 35% |
| $640,600+ | 37% |
Married couples filing jointly, heads of household, and married people filing separately each have their own version of this table with different thresholds — but the same slice-by-slice idea applies to all of them.
What "taxable income" means
You're not taxed on every dollar you earn. Before the brackets are applied, you subtract your standard deduction — a flat amount the IRS lets everyone subtract, no receipts required — from your total income. For 2026, the standard deduction is $16,100 for a Single filer and $32,200 for a married couple filing jointly. What's left after that subtraction is your taxable income, and that's the number the brackets actually apply to.
Marginal rate vs. effective rate
Your marginal rate is the rate on your last, highest dollar of income — the bracket you "top out" in. Your effective rate is your total tax divided by your income, which blends together all the lower rates you paid along the way. The effective rate is never higher than the marginal rate, and usually much lower. It's the number that describes what share of your income went to federal tax.
Take a Single filer earning $60,000. Subtract the $16,100 standard deduction and taxable income is $43,900. That amount is taxed slice by slice:
| Slice | Rate | Tax |
|---|---|---|
| First $12,400 | 10% | $1,240 |
| Next $31,500 | 12% | $3,780 |
Total federal tax comes to $5,020. This filer's marginal rate is 12% (the rate on their last dollar), but their effective rate is only 11.4% of taxable income — or just 8.4% of their full $60,000 gross income. That gap between marginal and effective rate is exactly why brackets don't work the way most people assume.
New deductions for 2025 through 2028
The One Big Beautiful Bill Act added four temporary deductions. You can take them on top of the standard deduction, and each phases out at higher incomes:
- Overtime: the extra half of time-and-a-half pay, up to $12,500 ($25,000 joint). See the no tax on overtime calculator.
- Tips: up to $25,000 of qualified tips.
- Age 65 and older: an extra $6,000 per person.
- Car loan interest: up to $10,000 a year on a new car assembled in the US.
Form 1040 and when it's due
Form 1040 is the standard tax return individuals file with the IRS each year to report income, claim deductions, and calculate the final tax bill (or refund). For the 2026 tax year, that return is typically due around April 15, 2027 — the filing deadline is generally April 15 of the year after the tax year ends, unless that date falls on a weekend or holiday.