How is take-home pay calculated?

Take-home pay is your gross salary minus federal income tax (based on tax brackets and standard deduction), Social Security tax (6.2% up to $184,500), Medicare tax (1.45% + 0.9% above $200K), and state/local income taxes. Our calculator computes all of these automatically.

Which states have no income tax?

Nine states have no personal income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. However, some make up revenue through higher property taxes, sales taxes, or other fees.

Is a higher salary always better if I move states?

Not necessarily. A $100K salary in a low-cost, low-tax state can provide more purchasing power than $130K in a high-cost, high-tax state. Always compare take-home pay AND cost of living. Our salary equivalent calculator does this math for you.

What’s the difference between marginal and effective tax rate?

Your marginal rate is the tax rate on your last dollar earned (the bracket you’re in). Your effective rate is total tax divided by total income — the actual percentage you pay overall. The effective rate is always lower because your first dollars are taxed at lower brackets.

Do these calculators account for deductions?

Our calculators use the 2026 standard deduction ($16,100 single / $32,200 married). If you itemize deductions, your actual tax bill may be lower. Consult a tax professional for personalized advice.

How accurate are state tax estimates?

These are estimates based on top marginal rates and simplified effective rate calculations. Actual state taxes depend on specific bracket structures, deductions, credits, and local taxes. Use these for comparison purposes — consult a CPA for exact figures.

How Tax Brackets Actually Work (And How to Use Them) — 2026

If your boss offered you a $1 raise that would push you into the next tax bracket, would you take it? Most people instinctively say no — fearing they'll suddenly owe much more in tax. They're wrong. Tax brackets in the U.S. are marginal: only the dollars above a bracket threshold are taxed at the higher rate. Refusing the raise would lose you $1 of income to save $0 in tax. This guide explains how brackets actually work and how to use them strategically for retirement, capital gains, and lifetime tax minimization.

Marginal vs Effective Rate: The Critical Distinction

Your marginal tax rate is the tax rate on your last dollar earned — the bracket you're currently sitting in. Your effective tax rate is your total tax divided by your total income — the actual percentage of your income going to taxes.

Concrete example: a single filer with $100,000 of taxable income (after standard deduction) in 2026. Federal tax calculation: $12,400 × 10% = $1,240, plus $37,450 ($49,850 - $12,400) × 12% = $4,494, plus $50,150 ($100,000 - $49,850) × 22% = $11,033. Total federal tax: $16,767.

Marginal rate: 22% (the bracket where the last dollar sits). Effective rate: $16,767 / $100,000 = 16.8%. The headline marginal rate of 22% is misleading — your average tax burden is actually 16.8%. This is why politicians can talk about a '37% top bracket' without anyone actually paying 37% on all their income.

Strategic implication: never refuse income to 'avoid a higher bracket.' If $1 of additional income pushes you into the 22% bracket, you pay 22 cents on that one dollar — keeping 78 cents. The other dollars you previously earned still pay their original rates. The fear of bracket creep eating your raise is mathematically impossible at the federal level.

The 2026 Federal Brackets: Single and Married

Single filer brackets for 2026: 10% up to $12,400; 12% from $12,400 to $49,850; 22% from $49,850 to $106,450; 24% from $106,450 to $203,300; 32% from $203,300 to $258,550; 35% from $258,550 to $640,600; 37% above $640,600. The 24%-to-32% jump is the biggest bracket transition — an 8 percentage point increase at exactly the income level where many professionals land.

Married filing jointly brackets for 2026: 10% up to $24,800; 12% from $24,800 to $99,700; 22% from $99,700 to $212,900; 24% from $212,900 to $406,550; 32% from $406,550 to $517,100; 35% from $517,100 to $768,700; 37% above $768,700. MFJ brackets are exactly double single brackets through 24%, then narrow as income climbs — creating the 'marriage penalty' for high-income dual-earner couples.

Standard deductions for 2026: $16,100 single, $32,200 married filing jointly, $24,150 head of household. The standard deduction is subtracted from your gross income before brackets apply. So a single filer with $100,000 gross income has $83,900 of taxable income (where the brackets apply), not $100,000.

Indexing note: bracket thresholds are adjusted annually for inflation. The 2026 numbers reflect IRS Revenue Procedure 2025-11. Pre-inflation projections assume CPI continues normal trajectory — surprises to inflation can move brackets meaningfully year-over-year. Tax planning should always use the current year's exact numbers.

The Long-Term Capital Gains Bracket Stack

Long-term capital gains have their own bracket structure that stacks on top of ordinary income. The 2026 LTCG brackets for single filers: 0% up to $48,350 of taxable income; 15% from $48,350 to $533,400; 20% above $533,400. For married filing jointly: 0% up to $96,700; 15% from $96,700 to $600,050; 20% above.

Critically, LTCG taxable income includes both ordinary income AND capital gains. So if you have $80,000 of ordinary income (in the 12% bracket as a single filer after standard deduction) and $30,000 of LTCG, the LTCG calculation 'starts' at $80,000. The first $-31,650 of LTCG (the gap from $80K to $48,350)... wait, that's already past the 0% bracket. The full $30K of LTCG sits in the 15% LTCG bracket.

But if your ordinary income is only $30,000 (well below the $48,350 LTCG 0% threshold) and you have $20,000 of LTCG, the first $18,350 of LTCG fills the 0% bracket (gap from $30K to $48,350) and the remaining $1,650 sits in the 15% bracket. This is the famous 'tax gain harvesting' technique for retirees with low ordinary income — realizing capital gains in years when they fall entirely in the 0% LTCG bracket.

Practical use case: an early retiree (age 55-65) with $40,000 of pension income and $1M in taxable brokerage account. Each year, they sell appreciated stock to capture gains in the 0% bracket (about $8,350 of room above the $40K pension). Over 10 years, they realize $83,500 of gains tax-free at the federal level — assuming taxable income stays under $48,350 each year. This is one of the most underused planning strategies.

Bunching Deductions Across Years

The standard deduction creates a planning opportunity: in years when your itemized deductions barely exceed the standard, you get marginal benefit from itemizing. By bunching deductions across multiple years, you can alternate between itemizing (high deduction year) and taking the standard (low deduction year), capturing more total benefit.

Concrete example: a couple with $32,000 of itemizable deductions per year. Standard deduction: $32,200. They take the standard each year, getting $32,200 of benefit. Itemized would give $32,000 — they're $200 worse off itemizing. Net deduction value: $32,200/year × 2 years = $64,400.

Bunched approach: in year 1, they make 2 years' worth of charitable contributions ($20,000 instead of $10,000), prepay state taxes if possible, schedule major medical procedures. Itemizable deductions for year 1: $42,000. They itemize and capture $42,000. Year 2, they revert to normal — no charitable, no large medical. Itemizable: $22,000. They take the standard $32,200. Total: $42,000 + $32,200 = $74,200. They captured $9,800 more deduction over 2 years.

Donor-Advised Funds (DAFs) make charitable bunching frictionless. You contribute a large lump sum to the DAF in the bunching year (immediate tax deduction), then distribute to actual charities over multiple subsequent years. The DAF takes the deduction; the charities receive support over time. For couples with stable charitable giving, this is essentially free money relative to giving the same total amount evenly each year.

Roth Conversion Windows in Lower-Bracket Years

Roth conversions are pure rate arbitrage — paying tax now at a known rate to avoid paying tax later at an unknown rate. The classic windows are years when your income is unusually low: between jobs, during a sabbatical, in early retirement before Social Security/RMDs begin, or during a low-income side-business year.

Strategic example: a single person retires at age 60 with $1M in traditional IRA and $500K in taxable brokerage. From age 60-72, they live on the brokerage account and take Social Security at 70. Their AGI in those years is just dividend/interest income (~$15K) plus modest investment income. Effective bracket: 10-12%. Each year they convert $40K-$60K from Traditional IRA to Roth IRA, paying 12% tax. By age 72, they've moved $500K-$700K to Roth at 12% rates.

Compare to no-conversion approach: at age 73, RMDs begin. The remaining $1M (now grown to $1.5M+) generates RMDs of $58K/year initially, growing each year. Combined with Social Security and brokerage income, AGI is $120K+. The retiree is now in the 22-24% bracket, paying double the rate they would have paid via conversion.

Conversion math: $500K converted at 12% = $60K of tax now vs. $500K eventually withdrawn at 22% = $110K of tax later. Saves $50K in present value, plus the converted assets grow tax-free in the Roth. Plus the Roth has no RMDs. Plus heirs inherit it tax-free (with 10-year withdrawal rule). For most early retirees with traditional IRAs, conversion ladders are the highest-ROI tax move available.

Tax-Loss Harvesting to Stay in a Bracket

Tax-loss harvesting (selling losing investments to realize losses, offsetting gains and up to $3,000 of ordinary income) has a bracket-management dimension. Specifically, harvesting losses can keep your AGI below specific thresholds: the $200K NIIT threshold, the IRMAA Medicare brackets, AGI-based phase-outs of various credits and deductions.

Concrete example: a couple has $260,000 of ordinary income and $40,000 of capital gains, putting them at $300,000 AGI. The NIIT threshold for MFJ is $250,000. They owe 3.8% on the $40,000 of gains plus the $10,000 above threshold = $1,520 in NIIT. By harvesting $40,000 of losses (offsetting the gains entirely), they reduce capital gains to zero, AGI to $260,000. NIIT on the $10,000 above threshold = $380. NIIT savings: $1,140. Plus regular capital gains tax savings: $40K × 15% = $6,000. Total tax savings: $7,140.

Wash sale rules apply: you cannot buy back the same or substantially identical security within 30 days before or after the loss sale (60-day window). This can complicate tactics — you sell the loser to harvest, but want to maintain market exposure. The workaround: buy a similar but not 'substantially identical' security (e.g., sell VOO, buy SPY — both S&P 500 funds but different issuers).

Carryforward losses: net capital losses above $3,000 carry forward to future years indefinitely. Losses don't expire. Aggressive harvesting in big down years (2008, 2022) can produce loss carryforwards that offset gains for a decade or more. High-income tech workers who saw stock options lose value in 2022 are still using those losses to offset 2024-2026 gains in many cases.