Key takeaways

• Federal income tax rates stay at 10%–37% for 2025 and 2026; bracket thresholds and standard deductions increase. Standard deduction: $15,750 (Single/MFS), $31,500 (MFJ), $23,625 (HOH) for 2025; $16,100, $32,200, and $24,150 for 2026.
• For 2025, the Social Security wage base is $176,100 (6.2% OASDI up to that cap). Medicare tax of 1.45% applies with no wage cap.
• Bonuses and other supplemental wages paid separately are generally withheld at 22%; once supplemental wages exceed $1,000,000 in a calendar year, amounts above that threshold are withheld at 37%.
• Marginal rate ≠ effective rate: a Single filer with $100,000 of taxable income in 2025 owes $16,913 before credits—an effective rate of ~16.9%.

The IRS set new federal tax bracket thresholds and higher standard deductions for 2025 and 2026 while rates remain 10%–37%. For 2025, the Social Security wage base is $176,100, and separately paid bonuses are generally withheld at 22% (37% above $1 million). Expect shifts in withholding, take-home pay, and filing results.

New federal bracket thresholds for 2025 and the 2026 schedules are set, even as the statutory rates stay put. This guide explains how brackets work, clarifies marginal versus effective rates, outlines the standard deduction and supplemental wage withholding, and connects those rules to outcomes such as paychecks, withholding elections, and April refunds or balances due. The focus is federal; state and local income taxes vary and are not addressed here.

Understanding income tax brackets

Tax brackets are the different ranges of income assigned certain tax rates. In the United States, there are seven tax brackets, with rates from 10% to 37%. Brackets differ based on filing status: single, married filing jointly, married filing separately, or head of household.

Tax brackets 2026

Below are the tax brackets for 2026, due in April 2027:¹

2026 tax brackets for single filers

2026 tax brackets for filers who are married, filing jointly

2026 tax brackets for filers who are married, filing separately

2026 tax brackets for head of household filers

Tax brackets 2025

Below are the tax brackets for 2025, due in April 2026:²

2025 tax brackets for single filers

2025 tax brackets for filers who are married, filing jointly

2025 tax brackets for filers who are married, filing separately

2025 tax brackets for head of household filers

Understanding federal income tax rates

The federal income tax is a tax the federal government imposes on the income of US taxpayers. Taxes apply to all types of income, regardless of location or line of work.

The first income tax in the United States dates back to the Civil War when the federal government imposed a tax to help fund the war. The government’s right to impose taxes was cemented in the 16th Amendment, passed by Congress in 1909 and ratified in 1913.³

Today, federal income taxes pay for much of the expenditures utilized to run the government and the country.

Most employed people have taxes withheld from paychecks by their employers. Additionally, taxpayers must file an income tax return for each tax year to report all their income to the government and ensure they’ve paid the correct amount in taxes.

Though the tax system in the United States is complicated, it’s important to understand how the tax brackets work, what tax bracket you’re in, and how your federal income tax bill is calculated.

Read more: Tax 101: Understanding the basics

Understanding federal income tax brackets

As we mentioned, federal tax brackets are the different income ranges that apply to the various income tax rates. The United States has a progressive tax system for income taxes, meaning portions of your income are taxed at different rates that get higher as your income increases.

As an illustration, if you file as a Single taxpayer, the first $11,925 of your taxable income in 2025 is taxed at the lowest rate, while the last dollars you earn are taxed at a higher rate.

Knowing your federal tax bracket is important for several reasons. It can help you estimate how much you might owe in taxes, as well as give you a better understanding of why you owe what you do when you file your income tax return.

Determining your federal tax bracket

You might be surprised that you don’t just fall into one tax bracket. Instead, different portions of your income fall into different brackets. The tax rate that corresponds to the highest tax bracket your income falls into is known as your marginal tax rate. Your marginal tax rate is the rate at which the last dollar you earn is taxed.

The IRS provides clear income ranges for each tax bracket so you can find which you’re in. Keep in mind that the income ranges are different for each filing status, so it’s important to identify which applies to you.

Finally, remember that the tax bracket you fall into is based on your taxable income, not your gross income.

Taxable income calculation

Your taxable income refers to the portion of your income that is actually subject to income taxes.

You’ll notice when you file your tax return that your taxable income and gross income aren’t the same. Instead, your taxable income is what’s left after you claim certain deductions and adjustments. Examples include the standard deduction, itemized deductions, the student loan interest deduction, and more.

Here’s general illustration of how to calculate your taxable income:

1. Add up all of your gross income.
2. Subtract adjustments — also known as “above-the-line” deductions — from your income. These deductions are available regardless of whether you itemize your deductions.
3. Choose between the standard deduction and itemizing your deductions.

Once you’ve subtracted all deductions and adjustments you’re eligible for, the number that’s left is your taxable income. Once you’ve found your taxable income, you can use it to determine your tax bracket and marginal tax rate.

Read more: How to reduce taxable income: Can the average American pay no taxes?

Determining your federal income tax

Once you’ve found your taxable income, you can calculate your federal income tax. But remember, your entire income isn’t taxed at the rate corresponding to your highest tax bracket. Instead, each portion of income is taxed at the rate that corresponds to the tax bracket it falls into.

Suppose you’re a single filer and have a taxable income of $100,000 in 2025. The first $11,925 of your income is taxed at 10%. The next $36,594 of your income is taxed at 12%. The next $51,524 of your income is taxed at 22%. Here’s how that works out for your 2025 taxes:

As you can see from the table above, the total income tax liability on $100,000 of taxable income is $16,913 which indicates an effective income tax rate of 16.9%.

But that number doesn’t necessarily represent how much you’ll actually pay in taxes. Tax credits also allow you to lower your income tax liability. And unlike tax deductions, tax credits are subtracted from your tax liability rather than your taxable income.  Tax credits you qualify for would be subtracted from your income tax of $16,913.

Standard deductions

For 2026, the standard tax deduction for single filers has been raised to $16,100, a $450 increase from 2025.⁴ For those married and filing jointly, the standard deduction has been raised to $32,200, up $700 from the previous year. Head of household has been raised to $24,150, up $525 from 2025.

IRS standard deduction

Income tax rate terms

The specifics of income taxes can be confusing, especially given the many terms, many of which can be easily confused. Let’s talk about some common income tax rate terms you may need to know:

• Income tax rates: Your income tax rate refers to the various percentages at which income taxes are applied. Most people pay multiple different income tax rates, each of which applies to a different portion of their income.
• Income tax brackets: Income tax brackets refer to the different ranges of income and the tax rates that apply. There are currently seven income tax brackets, each of which applies to a specific income amount.
• Marginal tax rate: Your marginal tax rate is the rate at which the last dollar of your income is taxed. It refers to the highest tax bracket you’re in. For example, if you earn $75,000 as a Single filer in 2025, your marginal tax rate is 22%, but you don’t pay 22% on all of your income.
• Effective tax rate: Your effective tax rate is the total tax you pay expressed as a percentage of your total taxable income. Because most people pay multiple tax rates, their effective tax rate is usually somewhere between their highest and lowest rates.
• Average tax rate: An average tax rate is the same as an effective tax rate.
• Ordinary tax rates: There are many different types of taxes that Americans pay. Income tax rates are also known as ordinary tax rates because they only apply to ordinary income. Different rates are used for other types of taxes.

Understanding other types of tax rates

Income taxes are just one type of tax you’ll owe the IRS each year, but it’s not the only type. Two other federal tax rates many people must pay are capital gains and FICA taxes.

Capital gains and dividend tax rates

A capital gain is when you sell an item for more than your adjusted basis (usually the amount you paid for it). Capital gains can technically apply to any asset, but they most often apply when discussing investments like stocks and bonds.

There are two basic types of capital gains. Short-term capital gains refer to gains on assets you have owned for less than one year. Long-term capital gains refer to gains on assets you have owned for more than one year. These two types of capital gains have different tax treatments.

First, short-term capital gains are taxed as ordinary income, meaning tax rates range from 10% to 37%. Long-term capital gains have a more favorable tax rate. Gains are taxed at 0%, 15%, or 20%, depending on your income.

It’s worth noting that some items have a slightly higher capital gains tax. For example, net capital gains on certain collectibles are taxed at 28%.

If you earn qualified dividends from your investments, you’ll pay rates similar to long-term capital gains tax rates on those earnings. Those that aren’t qualified are taxed as ordinary income. If you aren’t sure if your dividends are qualified, you can revisit your 1099-DIV form, as ordinary and qualified dividends are listed separately.

Read more: Ways to avoid or minimize capital gains tax

FICA tax rates

Another type of federal tax most people pay each year is FICA — short for Federal Insurance Contributions Act — taxes. FICA taxes are made up of Social Security taxes and Medicare taxes.⁶ For employees, FICA taxes are taken out of each paycheck by your employer, which affects your take-home pay.

Social Security taxes

Social Security taxes pay for the retirement and disability benefits the Social Security Administration provides. Workers pay 6.2% of their income in Social Security taxes, and their employers match it for a total tax rate of 12.4%.

For 2025, the Social Security tax limit is $176,100.⁷

Medicare taxes

Medicare taxes pay for the country’s Medicare program, which provides health insurance to those ages 65 and older. In 2025, both employees and employers pay a tax rate of 1.45%, for a total tax rate of 2.9%.⁸ Unlike Social Security taxes, Medicare taxes don’t have a maximum taxable amount. Instead, you’ll pay Medicare taxes on all of your earned income.

Taxpayers with self-employment income calculate and pay FICA and Medicare taxes differently than those who are employed since there’s no employer to provide the matching contribution.  While the same thresholds apply, the rates paid by self-employed taxpayers are generally double the amounts employed taxpayers contribute.

Understanding bonus tax withholding rate

If you’ve ever received a bonus from your employer, you may remember your tax withholding looking a bit different. The IRS sets certain standards for how employers should withhold taxes for supplemental wages, including bonuses. Other income that’s subject to the supplemental wage withholding rules includes:

• Commissions
• Overtime pay
• Payments for accumulated sick leave
• Severance pay
• Awards and prizes
• Back pay
• Reported tips
• Retroactive pay increases
• Payments for nondeductible moving expenses

Bonus tax withholding rate explained

When you receive a bonus, the withholding rate will be determined using one of two methods: the percentage method or the aggregate method.

Bonus withholding for high earners

Tax withholding is treated differently for workers who earn more than $1 million in supplemental wages throughout a calendar year. In that case, all supplemental income is subject to a withholding rate of 37%, the highest marginal tax rate.

Handling excess bonus tax withholding

As with other income taxes, the amount your employer withholds in taxes for your bonus isn’t necessarily the amount you’ll owe. In fact, when all is said and done, bonuses and supplemental income are treated and taxed exactly like any other income, including when it comes to state income taxes and FICA taxes (Social Security and Medicare).

While the IRS requires a withholding rate of 22% on supplemental income, many workers aren’t in the 22% tax bracket. If your bonus is taxed at a higher rate than you actually owe, you’ll may get the excess back as a part of your tax refund, just as you would excess taxes on any other part of your income.

However, it also works the other way. Perhaps your employer withholds the mandatory 22% on your bonus, but you’re actually in a higher tax bracket. In that case, you could end up owing additional taxes on your bonus money.