Take Home Pay & Tax Calculators

How US Federal Income Tax Brackets Work

The US uses a progressive marginal tax rate system, meaning different portions of income are taxed at different rates. For 2025, the federal brackets for a single filer are approximately: 10% on income up to $11,925; 12% on $11,925–$48,475; 22% on $48,475–$103,350; 24% on $103,350–$197,300; 32% on $197,300–$250,525; 35% on $250,525–$626,350; and 37% on income above $626,350. A common misconception is that moving into a higher bracket means all of your income is taxed at that rate — only the income within each bracket is taxed at that bracket's rate.

Marginal vs. Effective Tax Rate

The marginal tax rate is the rate applied to the last dollar of income earned — it is what moves when you earn more. The effective (average) tax rate is total tax paid divided by total income. For example, a single filer earning $100,000 in 2025 would have a marginal rate of 22% but an effective rate of roughly 15–16% because lower portions of their income were taxed at 10% and 12%. When making decisions about raises, deductions, or retirement contributions, the marginal rate is what matters — it determines the tax cost or savings of additional income or deductions.

Bonus Taxation

Bonuses are considered supplemental wages by the IRS and are taxed differently from regular wages. The flat withholding method applies a flat 22% federal withholding rate to bonuses up to $1 million (37% above $1 million). Alternatively, employers may use the aggregate method, which adds the bonus to the employee's most recent regular paycheck and calculates withholding on the total. The flat method is simpler and most common for employer payroll purposes. The amount withheld is not necessarily the final tax owed — the true tax liability is settled when you file your annual return.

Self-Employment Tax

Self-employed individuals pay self-employment (SE) tax at 15.3% on net self-employment income up to the Social Security wage base ($176,100 in 2025), which covers both the employee (7.65%) and employer (7.65%) portions of FICA taxes. Above the wage base, a 2.9% Medicare-only rate applies (plus an additional 0.9% for high earners). Self-employed individuals can deduct half of the SE tax paid from their gross income when calculating income tax, which partially offsets the higher rate. Quarterly estimated tax payments are required for those expecting to owe $1,000 or more in tax for the year.