How Federal Tax Brackets Work (With a 2026 Example)
The United States uses a marginal tax system. Your income is divided into slices, and each slice is taxed at its own rate. Moving into a higher bracket only affects the dollars above the bracket line, not everything you earn.
A worked example
Take a single filer with $76,100 of income in 2026. The standard deduction for a single filer is $16,100, so taxable income is $60,000. The first $12,400 is taxed at 10%, the amount from $12,400 to $50,400 is taxed at 12%, and the remaining $9,600 above $50,400 is taxed at 22%.
| Slice of taxable income | Rate | Tax |
|---|---|---|
| $12,400 | 10% | $1,240 |
| $38,000 | 12% | $4,560 |
| $9,600 | 22% | $2,112 |
| Total | $7,912 |
Marginal vs effective rate
This person is in the 22% bracket, which is their marginal rate: the rate on their next dollar of taxable income. Their effective rate is total tax divided by taxable income, about 13.2%, and lower still as a share of the $76,100 they earned. The effective rate is what you actually pay on average.
A raise cannot lower your take-home pay
A common myth is that a raise can push you into a higher bracket and leave you with less money. It cannot, because only the additional income is taxed at the higher rate. Your paycheck can feel smaller for other reasons, such as higher benefit costs, but not because of the bracket system itself.
Ways to lower taxable income
Pre-tax contributions to a traditional 401(k) or an HSA reduce taxable income, and itemizing can help if your deductions exceed the standard deduction. Credits reduce the tax itself and are usually more valuable than deductions of the same size.
Figures are for the 2026 tax year and for illustration only. Brackets and deductions change every year, and your situation may involve credits and rules not shown here.