A progressive tax is one where the rate rises as income rises, applied in layers: the first slice of what you earn is taxed at the lowest rate, the next slice at a higher rate, and so on up the scale. The U.S. federal income tax works this way. For 2026, rates start at 10% on the first dollars of taxable income and top out at 37% on taxable income above $640,600 for a single filer.1Internal Revenue Service. Revenue Procedure 2025-32 Each rate applies only to the income falling inside its range, never to your whole paycheck.
How Marginal Rates Work
Your marginal tax rate is the percentage charged on your last dollar of income. If you earn $60,000 and the bracket covering that top slice charges 22%, your marginal rate is 22%. But the first chunk of your income was taxed at 10%, the next chunk at 12%, and only the portion above the 22% threshold got hit at 22%. Your effective rate — the share of your total income that actually goes to tax — ends up well below the marginal figure.
This is the most misunderstood part of the code. People turn down overtime or side income because they think crossing into a new bracket will push all their earnings into a higher rate. It won’t. Under a progressive structure, earning more always leaves you with more after tax. Only the additional income above a threshold is taxed at the higher rate.
2026 Federal Tax Brackets
The IRS adjusts the bracket thresholds each year for inflation. The seven rates and their income ranges for 2026 look like this for the three most common filing statuses.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Single Filers
- 10%: up to $12,400
- 12%: $12,401 to $50,400
- 22%: $50,401 to $105,700
- 24%: $105,701 to $201,775
- 32%: $201,776 to $256,225
- 35%: $256,226 to $640,600
- 37%: over $640,600
Married Filing Jointly
- 10%: up to $24,800
- 12%: $24,801 to $100,800
- 22%: $100,801 to $211,400
- 24%: $211,401 to $403,550
- 32%: $403,551 to $512,450
- 35%: $512,451 to $768,700
- 37%: over $768,700
Head of Household
- 10%: up to $17,700
- 12%: $17,701 to $67,450
- 22%: $67,451 to $105,700
- 24%: $105,701 to $201,750
- 32%: $201,751 to $256,200
- 35%: $256,201 to $640,600
- 37%: over $640,600
Married couples filing separately use the same thresholds as single filers through the 32% bracket, but the 35% bracket ends at $384,350 and the 37% rate applies above that.1Internal Revenue Service. Revenue Procedure 2025-32
The Standard Deduction Comes First
Before any bracket math begins, most taxpayers subtract the standard deduction from their gross income. For 2026, the standard deduction is:2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- Single: $16,100
- Married filing jointly: $32,200
- Head of household: $24,150
- Married filing separately: $16,100
The standard deduction effectively creates a zero-percent bracket. A single filer earning $16,100 or less in 2026 owes no federal income tax because the deduction wipes out the entire taxable amount. Taxpayers with substantial mortgage interest, charitable contributions, or state tax payments may itemize instead; you use whichever method produces the larger reduction.3Internal Revenue Service. Deductions for Individuals
Calculating Your Tax Step by Step
Take a single filer earning $85,000 in gross income for 2026. First, subtract the $16,100 standard deduction to get $68,900 in taxable income. Then run that $68,900 through the brackets:
- 10% on the first $12,400 = $1,240
- 12% on the next $38,000 (from $12,401 to $50,400) = $4,560
- 22% on the remaining $18,500 (from $50,401 to $68,900) = $4,070
Total federal income tax: $9,870. That’s an effective rate of about 11.6% on the full $85,000, well below the 22% marginal bracket this filer lands in.1Internal Revenue Service. Revenue Procedure 2025-32
Now suppose this same filer gets a $5,000 raise, bringing gross income to $90,000 and taxable income to $73,900. The only change is that an additional $5,000 falls into the 22% bracket, adding $1,100 in tax. The filer keeps $3,900 of the raise. A raise never backfires.
Why Your Effective Rate Is Lower Than Your Marginal Rate
The gap between the two rates is the whole point of a progressive tax. Every taxpayer, no matter how high their income, gets the benefit of the low rates on their first layers of earnings. Someone in the 37% bracket still pays only 10% on their first $12,400, still pays 12% on the next chunk, and so on. Those cheaper layers pull the average down.
Higher earners still pay a larger share of their income than lower earners, because more of their income sits in the higher brackets. But no one pays their marginal rate on every dollar. The effective rate is always lower, and that structural feature is what distinguishes a progressive tax from a flat tax.
Where the Progressive Structure Extends
The seven-bracket schedule above governs ordinary income: wages, self-employment earnings, interest, short-term investment gains, and most retirement withdrawals. Long-term capital gains — profits on investments held longer than a year — follow a separate progressive schedule with rates of 0%, 15%, and 20% based on total taxable income. For a single filer in 2026, the 0% rate applies up to $49,450 of taxable income, 15% covers the range up to $545,500, and 20% applies above that. Joint filers get the 0% rate up to $98,900 and hit 20% above $613,700. Investments sold within a year are taxed as ordinary income instead, at whatever your marginal bracket happens to be.
High earners face an additional 3.8% net investment income tax on top of the capital gains rate when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for joint filers.4Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax Those thresholds are not adjusted for inflation.
A parallel calculation called the alternative minimum tax runs alongside the regular brackets for some high-income filers. It strips out certain deductions and applies flat rates of 26% and 28%; you pay whichever amount is higher.5Office of the Law Revision Counsel. 26 USC 55 – Alternative Minimum Tax Imposed For 2026, the AMT exemption is $90,100 for single filers and $140,200 for joint filers, phasing out at $500,000 and $1,000,000 respectively.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Most wage earners never owe it.
Federal brackets are only part of the total. Forty-two states and the District of Columbia impose their own income taxes, and most use a progressive structure with separate brackets. Top marginal state rates run from around 2.5% at the low end to over 13% at the high end. Eight states have no individual income tax. Your combined effective rate depends heavily on where you live.