Tax brackets
Income ranges taxed at increasing rates; each rate applies only to the income within its range.
Explanation
The US federal income tax has seven ordinary brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%. They apply to taxable income, meaning income after the standard or itemized deduction. Each rate applies only to the slice of income inside its range.
The 2026 thresholds (taxable income) are:
| Rate | Single | Married filing jointly |
|---|---|---|
| 10% | up to $12,400 | up to $24,800 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 |
| 37% | over $640,600 | over $768,700 |
These rates were made permanent by 2025 legislation. Thresholds are indexed each year using chained CPI, so they rise over time. Head-of-household and married-filing-separately filers have their own tables.
Long-term capital gains and qualified dividends use separate 0%/15%/20% brackets, but they stack on top of ordinary income, so your ordinary income determines where they start.
In scenarios, the app applies these brackets to each projected year, indexing thresholds by your inflation assumption. Tax law can change, so far-future tax estimates are projections, not certainties. States have their own brackets or flat rates, and some have no income tax.
Example
A married couple in 2026 has $150,000 of wages. After the $32,200 standard deduction, taxable income is $117,800.
- 10% × $24,800 = $2,480
- 12% × ($100,800 − $24,800 = $76,000) = $9,120
- 22% × ($117,800 − $100,800 = $17,000) = $3,740
- Total: $15,340
They are “in the 22% bracket,” but only $17,000 of their income is taxed at 22%. Their effective rate on wages is $15,340 ÷ $150,000 = 10.2%.