Professional services
Income Tax Calculator
Estimates income tax, where the marginal rate is not the rate you pay overall.
Result
Not tax advice, and not a filing calculation. This estimates what to set aside using rates you supply. Brackets, thresholds, deductions, credits and state rules change every year and interact with the rest of your return in ways no single calculator models. Confirm anything that affects a payment or a filing with an accountant. This applies a flat marginal rate to all taxable income, which overstates the tax because real systems are progressive: only income above each threshold is taxed at the higher rate. For a rough set-aside that conservatism is useful; for a filing figure it is wrong.
Get a Free Business AuditHow the calculation works
Taxable income after the standard or itemised deduction is taxed through progressive brackets, meaning each portion of income is taxed at the rate for its own bracket rather than the whole at the top rate. The effective rate, total tax divided by income, is therefore always lower than the marginal rate on the last dollar.
What moves the number
- Filing status, which sets the bracket thresholds.
- Deductions, standard or itemised.
- Credits, which reduce tax directly rather than reducing income.
- State income tax, which is not modelled here.
Where this one goes wrong
A common misunderstanding is that crossing into a higher bracket taxes all income at the new rate; only the portion above the threshold is taxed there, which means extra income is never taxed at more than its own marginal rate. Credits and deductions also work differently: a deduction reduces taxable income so its value depends on your bracket, while a credit reduces tax directly and is worth its full amount. Rates and thresholds change annually.
Before you quote
- Distinguish marginal from effective rate before planning anything.
- Treat credits and deductions as the different things they are.
- Add state income tax, which is outside this estimate.
Where the rules come from
Questions
About this calculator
Does crossing a bracket tax all my income at the higher rate?
No. Only the portion above the threshold is taxed at the higher rate, which is why the effective rate is always lower than the marginal rate. Extra income is never taxed at more than its own marginal rate.
Which is worth more, a deduction or a credit?
A credit of the same amount, generally, because it reduces tax directly while a deduction reduces taxable income and is therefore worth only your marginal rate on it. They are often discussed as though interchangeable and they are not.
Does this include state tax?
No. State income tax varies widely in rate and structure, with several states imposing none, and modelling it would require state-specific rules. Add your state's position separately to anything this produces.
The formula
taxable income = gross - deductions - pre-tax contributions; tax = taxable x rates, less credits
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How to use this calculator
- Gross income ($). Enter your own figure; the page starts at $95,000.
- Deductions ($). Standard or itemised, whichever you take.
- Pre-tax retirement and benefits ($). Enter your own figure; the page starts at $6,000.
- Federal marginal rate (%). Enter your own figure; the page starts at 22%.
- State rate (%). Enter your own figure; the page starts at 5%.
- Tax credits ($). Credits reduce tax owed directly, unlike deductions.
The result updates as you type, so you can try a figure, see what it does to estimated tax, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Gross income | $95,000 |
| Deductions | $14,600 |
| Pre-tax retirement and benefits | $6,000 |
| Federal marginal rate | 22% |
| State rate | 5% |
| Tax credits | $0 |
What comes out
| Result | Value |
|---|---|
| Estimated tax main result | $20,088 |
| Taxable income | $74,400 |
| Federal | $16,368 |
| State | $3,720 |
| After tax | $74,912 |
| Effective rate on gross | 21.15% |
Taxable income of $74,400 produces about $20,088 of tax, leaving $74,912. That is an effective rate of 21.15% on gross, well below the 22 marginal rate.
How sensitive the answer is
Holding everything else steady and changing only gross income, this is what happens to estimated tax. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Gross income ($) | Estimated tax |
|---|---|
| $47,500 | $7,263 |
| $71,250 | $13,676 |
| $95,000 example above | $20,088 |
| $142,500 | $32,913 |
| $190,000 | $45,738 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Gross income ($)
- A money amount, starting at $95,000.
- Deductions ($)
- Standard or itemised, whichever you take.
- Pre-tax retirement and benefits ($)
- A money amount, starting at $6,000.
- Federal marginal rate (%)
- A percentage, between 0 and 50, starting at 22%.
- State rate (%)
- A percentage, between 0 and 15, starting at 5%.
- Tax credits ($)
- Credits reduce tax owed directly, unlike deductions.
What the results tell you
| Result | What it is |
|---|---|
| Estimated tax | The headline result. A money figure. |
| Taxable income | A money figure. |
| Federal | A money figure. |
| State | A money figure. |
| After tax | A money figure. |
| Effective rate on gross | A percentage. |
Keep going
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