Marginal rate versus average rate
The United States has a progressive income tax. Your taxable income is divided into slices, and each slice is taxed at its own rate. Your marginal rate is the rate on your last dollar of income, the one that applies to additional income or a new deduction. Your average (effective) rate is your total tax divided by your taxable income, and it is always lower. Year-end decisions depend on the marginal rate: a $5,000 pre-tax contribution saves tax at your marginal rate, not your average rate. This calculator shows both.
2026 federal brackets
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 12% | over $12,400 | over $24,800 | over $17,700 |
| 22% | over $50,400 | over $100,800 | over $67,450 |
| 24% | over $105,700 | over $211,400 | over $105,700 |
| 32% | over $201,775 | over $403,550 | over $201,750 |
| 35% | over $256,225 | over $512,450 | over $256,200 |
| 37% | over $640,600 | over $768,700 | over $640,600 |
Married couples filing separately use the single thresholds except that the 37% bracket starts at $384,350. These apply to taxable income after the standard or itemized deduction. A single filer with $90,000 of income and the $16,100 standard deduction has $73,900 of taxable income and owes $10,970, an average of 14.8%, but the last dollars are taxed at 22%, with $31,800 of room before the 24% bracket starts.
Testing a year-end move
Choose “extra deduction or pre-tax contribution” to model something that lowers taxable income, for example a deductible traditional IRA contribution, extra pre-tax 401(k) deferrals, an HSA contribution or charitable gifts that you will itemize. In the example above, a $5,000 deduction cuts tax by $1,100, 22% of the amount. Choose “extra income” to see the cost of a Roth conversion, a bonus or a taxable investment sale: converting $50,000 for a married couple with $117,800 of taxable income adds $11,000 of tax, because the whole amount fits in the 22% bracket.
Filling a bracket on purpose
The “room left” figure is useful if you have a year with unusually low income, such as a gap between jobs or early retirement. Converting traditional IRA money to a Roth IRA up to the top of a low bracket locks in today’s rate and shrinks future required distributions. The reverse applies in a high-income year, when a deduction is worth more. See our Roth conversion guide for the trade-offs, including the fact that a conversion is added to your income for the year and cannot be undone.
Cliffs the calculator does not show
- ACA subsidies. Extra income can reduce or eliminate premium tax credits; above 400% of the poverty line, they disappear entirely.
- Medicare premiums. Income-related surcharges (IRMAA) apply to income two years earlier.
- Social Security. Additional income can make more of your benefits taxable.
- Investment income. Extra ordinary income can push gains out of the 0% bracket or trigger the 3.8% surtax.