Tax Calculator
Calculate your estimated tax liability with our comprehensive tax calculator. Includes support for deductions, adjustments, and tax credits.
Standard deduction: $14,600
Understanding Income Taxes
Progressive Taxation System
The United States and many other countries use a progressive tax system, where income is taxed at different rates based on income levels. As your income increases, you pay higher tax rates on the additional income, but not on all your income. This creates a system of tax brackets where different portions of your income are taxed at different rates.
Marginal vs. Effective Tax Rates
Marginal Tax Rate:
The rate applied to your last dollar of income
Effective Tax Rate:
Your total tax divided by your taxable income
For example, someone with a taxable income of $60,000 might be in the 22% tax bracket (their marginal rate), but their effective tax rate would be approximately 13.5% because the lower portions of their income were taxed at 10% and 12%.
Understanding this distinction helps clarify why a raise that "pushes you into a higher tax bracket" only affects the portion of income above the threshold.
2024 Federal Tax Brackets (Single Filers)
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 to $11,600 |
| 12% | $11,601 to $44,725 |
| 22% | $44,726 to $95,375 |
| 24% | $95,376 to $182,100 |
| 32% | $182,101 to $231,250 |
| 35% | $231,251 to $578,125 |
| 37% | Over $578,125 |
Key Tax Concepts
Gross Income
All income you receive during the year before any deductions or adjustments. Includes wages, self-employment income, interest, dividends, rental income, and more.
Adjusted Gross Income (AGI)
Your gross income minus "above-the-line" deductions like certain retirement contributions, student loan interest, and health savings account contributions.
Taxable Income
AGI minus standard or itemized deductions. This is the amount actually subject to income tax and used to calculate your tax liability.
Deductions vs. Credits
Tax Deductions
Reduce your taxable income before calculating tax.
Example:
- $100,000 income with $20,000 in deductions
- Taxable income becomes $80,000
- If your marginal tax rate is 22%, you save $4,400 in taxes ($20,000 × 22%)
Deductions are more valuable to those in higher tax brackets.
Tax Credits
Reduce your tax bill dollar-for-dollar after calculating tax.
Example:
- $15,000 tax liability with $3,000 in credits
- Final tax bill becomes $12,000
- Credits provide the same benefit regardless of your tax bracket
Credits are generally more valuable than deductions of the same amount.
Tax Planning Strategies
- Maximize retirement contributions: Contributions to tax-advantaged accounts like 401(k)s and Traditional IRAs can reduce your taxable income.
- Harvest tax losses: Offset capital gains with capital losses to reduce your tax liability.
- Bunch itemized deductions: Concentrate deductible expenses in alternating years to exceed the standard deduction threshold.
- Consider tax-efficient investments: Municipal bonds offer tax-free interest, and long-term capital gains are taxed at lower rates than ordinary income.
- Utilize health savings accounts (HSAs): These offer triple tax advantages: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
- Claim all eligible tax credits: Research available credits like the Child Tax Credit, Earned Income Tax Credit, or education credits.
- Time income and deductions strategically: If possible, accelerate deductions into high-income years and defer income to lower-income years.
Important Notice
This calculator provides estimates based on federal income tax brackets and standard deductions for the 2024 tax year for single filers. Your actual tax situation may differ based on filing status, state taxes, additional credits, and specific tax circumstances. Always consult with a tax professional for personalized tax advice.