Effective vs Marginal Tax Rate Calculator

Enter your taxable income and filing status to see exactly how much of your income lands in each bracket, what your effective rate is, and how much a raise or bonus will actually cost in federal tax.

Effective (average) tax rate

Detailed results
Marginal tax rate (top bracket)	0%
Federal income tax	$0.00
Effective rate on additional income	0%
Tax on additional income	$0.00

What this result means

On $120,000 of taxable income you owe roughly $0 in federal income tax. Your effective (average) rate is 0.0%, meaning that is the share of your total income that goes to federal tax. Your marginal rate — the rate on your next dollar — is 0.0%, which is higher because the progressive bracket system only taxes each slice at that rate, not your whole income. If you receive an additional $10,000, the effective rate on that specific amount is 0.0% — which may be higher than your overall effective rate because that money lands in your top brackets.

How this is calculated

federal_tax = Σ (min(income, bracket.to) − bracket.from) × bracket.rate for each bracket
effective_rate = federal_tax / taxable_income × 100
marginal_rate = rate of the bracket containing the last dollar
effective_rate_on_addition = (tax(income + addition) − tax(income)) / addition × 100

The biggest misconception in personal finance

Ask most people what happens when a raise pushes them into a higher tax bracket and they will tell you their whole paycheck is suddenly taxed at that higher rate. This is wrong, and it leads to genuinely bad decisions — people turning down bonuses, avoiding overtime, or over-contributing to retirement accounts out of fear that "the government takes more anyway."

Here is what actually happens. The federal income tax system is progressive and bracketed. Think of it as a series of buckets stacked on top of each other. The first bucket holds the lowest-bracket income and is taxed at the lowest rate. Only after that bucket is full does income spill into the next one, taxed at a slightly higher rate. A raise that crosses a bracket boundary means only the dollars above the threshold get taxed at the new rate. Every dollar below the threshold stays taxed exactly as before.

Effective rate vs marginal rate

Two numbers describe your tax situation, and they are almost never the same.

Your marginal rate is the rate on your next dollar of income — the top bracket you have reached. It is the number most people have in mind when they say "I'm in the 22% bracket." It tells you the cost of earning one more dollar today.

Your effective rate (also called your average rate) is total federal income tax divided by total taxable income. It is always lower than your marginal rate in a progressive system because your earlier dollars were taxed at lower rates. A taxpayer "in the 22% bracket" typically has an effective rate well below 22%, because a meaningful chunk of their income was taxed at 10% and 12% first.

The effective rate is the more useful number for budgeting and comparing years. The marginal rate is the more useful number for decisions about incremental income — a freelance project, a Roth conversion, or the tax cost of selling an asset.

What taxable income means

This calculator works on taxable income — the number after the standard deduction (or itemized deductions) has been subtracted from adjusted gross income. It is not your salary. For 2025, the standard deduction is a meaningful reduction that pushes most taxpayers' effective rates lower than they expect. This calculator does not apply the standard deduction for you; enter the income figure from line 15 of Form 1040 (or your best estimate of it).

What is not included

Federal income tax is only one piece of the full tax picture. FICA taxes — Social Security and Medicare — are applied to wages before the income tax brackets, at flat rates up to the wage base, and are not reflected here. State income taxes vary by jurisdiction and are also excluded. Credits (child tax credit, earned income credit, education credits) directly reduce your tax bill and are not modelled. The result is a federal income tax liability before credits and before FICA, which is the right baseline for understanding bracket mechanics but not a complete picture of your total tax burden.

Assumptions

Federal income tax only — FICA (Social Security and Medicare), state income taxes, and local taxes are excluded.
No credits or deductions are applied beyond what is already reflected in the taxable income you enter. Enter the after-deduction figure, not gross income.
2025 federal income tax rate schedules are used. Bracket thresholds are sourced from IRS Rev. Proc. 2024-61.
The alternative minimum tax (AMT) is not computed. High-income taxpayers or those with large preference items may owe more.
Married filing separately and head-of-household filers use a placeholder bracket table (single filer thresholds) until those specific 2025 schedules are verified and added to the rate file.
The additional income test assumes the additional amount is ordinary income taxed in the same bracket system, not capital gains or qualified dividends.

Frequently asked questions

›Does getting a raise push all my income into the higher bracket?

No. Only the dollars above the new bracket threshold are taxed at the higher rate. All income below that threshold continues to be taxed at the same rates as before. A raise that crosses a bracket line costs you more in tax only on the portion above the line, not on your entire income.

›What is the difference between effective rate and marginal rate?

Your marginal rate is the rate applied to your last (and next) dollar of taxable income — the top bracket you have reached. Your effective rate is total tax divided by total taxable income, representing what fraction of your income actually went to federal tax. Because lower brackets apply to earlier dollars, the effective rate is always lower than the marginal rate for any positive taxable income.

›Is this my actual tax bill?

Not necessarily. This calculator shows federal income tax on taxable income using the 2025 bracket rates. It does not account for tax credits (which directly reduce the bill), FICA taxes (Social Security and Medicare), state income taxes, the alternative minimum tax, net investment income tax, or any other adjustments. Treat the result as a useful estimate of your bracket-level federal liability, not a substitute for your completed return.

›Why does my effective rate seem low?

Progressive brackets mean your first dollars are taxed at very low rates — 10% at the base. Even a taxpayer with $150,000 of taxable income has their first tier taxed at 10% and the next at 12% before reaching higher brackets, pulling the average down significantly. The standard deduction also keeps a large chunk of gross income out of the calculation entirely.

›What about state taxes and FICA?

This calculator covers federal income tax only. FICA (Social Security at 6.2% on wages up to the wage base and Medicare at 1.45% with an additional 0.9% above a threshold) is collected separately from wages and is not shown here. State income taxes vary widely — from 0% in states like Texas and Florida to over 13% in California. For a complete picture of your tax burden, add state taxes and FICA to the federal figure from this calculator.