There is no 45 percent tax bracket in the U.S. federal income tax system. Federal rates for 2026 run through seven brackets topping out at 37 percent, set under 26 U.S.C. § 1 and adjusted for inflation each year. The 45 percent figure that circulates in financial conversations is real, just not federal: several other countries use exactly 45 percent as their top rate, and many American high earners cross 45 percent once state, local, and investment surtaxes are added to their federal bill.
The 2026 Federal Brackets
The seven-bracket structure introduced by the Tax Cuts and Jobs Act of 2017 was scheduled to expire at the end of 2025, which would have restored a 39.6 percent top rate. The One, Big, Beautiful Bill Act, signed on July 4, 2025, extended the TCJA’s individual rates, so the 37 percent ceiling remains in place for 2026.
Single filers:
- 10%: income 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%: income 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
These thresholds come from the IRS’s inflation-adjusted figures for tax year 2026.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 There is no rung at 45 percent anywhere on that ladder, and no proposal in current law would insert one.
Why Your Top Bracket Isn’t the Rate You Actually Pay
A frequent misreading treats the top bracket as the rate that applies to your whole income. It doesn’t. Each bracket rate applies only to the dollars that fall inside its range. A single filer earning $700,000 pays 10 percent on the first $12,400, 12 percent on the next slice, and so on up the ladder. Only the income above $640,600 gets taxed at 37 percent.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
The effective rate, meaning the share of your total income that actually goes to the IRS, will always be lower than your top marginal rate. Someone in the 37 percent bracket typically has an effective federal rate in the mid-to-high 20s depending on deductions. That distinction matters when people describe themselves as paying “45 percent.” Even if the marginal rate on your last dollar earned crosses 45 percent, the overall share of income you owe is meaningfully lower.
How Combined Taxes Cross 45 Percent
The 45 percent figure enters real U.S. tax planning through stacking. No single federal bracket reaches it, but layering federal, state, local, and surtaxes on the same dollar of income gets there quickly for high earners.
State Income Taxes
Top state income tax rates range from zero in states without an income tax to more than 13 percent in the highest-tax states. Adding 13-plus percent to the federal 37 percent produces a marginal rate above 50 percent on the last dollar earned, before any other taxes. States with more moderate top rates of 5 to 9 percent still push top earners past 42 percent combined.
Local Income Taxes
Some cities add their own income tax. Local rates in a handful of large metros approach 4 percent, layering on top of state and federal obligations. A high earner in a city with both a steep state rate and a local tax can face a combined income-tax marginal rate in the mid-50s.
Net Investment Income Tax
High-income taxpayers with investment gains, dividends, rental income, or other passive earnings owe an additional 3.8 percent Net Investment Income Tax. The surtax applies when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for joint filers.2Office of the Law Revision Counsel. 26 US Code 1411 – Imposition of Tax It sits on top of every other income and investment tax, so a top earner with significant investment income in a high-tax state can face a combined marginal rate above 55 percent on that income.3Internal Revenue Service. Questions and Answers on the Net Investment Income Tax
The SALT Deduction Cap
The cap on deducting state and local taxes makes the combined burden bite harder. For 2026, the SALT cap is $40,000 for most filers, phases out for modified adjusted gross income above $500,000, and drops to $10,000 for income above $600,000.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Before the TCJA, state and local taxes were fully deductible. The cap means high earners in high-tax states pay state tax with after-tax dollars on amounts above the cap, raising the true combined rate.
Self-Employment and Medicare Taxes
Income taxes are only part of the stack. Self-employed workers owe 12.4 percent Social Security tax on net earnings up to $184,500 and 2.9 percent Medicare tax on all net earnings, a total self-employment tax of 15.3 percent.4Social Security Administration. If You Are Self-Employed Employees split those costs with their employer; self-employed filers pay both halves. Half the self-employment tax is deductible against gross income, but the cash still leaves the account.
An Additional Medicare Tax of 0.9 percent then applies to earnings above $200,000 for single filers and $250,000 for joint filers.5Internal Revenue Service. Questions and Answers for the Additional Medicare Tax For a self-employed high earner above the Social Security wage base, the federal-only marginal stack works out to roughly 40.8 percent: 37 percent income tax plus 2.9 percent Medicare plus 0.9 percent Additional Medicare Tax. Add any state income tax and the total sits comfortably past 45 percent.
The Alternative Minimum Tax
Some filers face the Alternative Minimum Tax, a parallel calculation designed to prevent high-income households from erasing their bill with deductions and credits. For 2026, the AMT exemption is $90,100 for single filers and $140,200 for joint filers, with phase-outs beginning at $500,000 and $1,000,000 respectively.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 If AMT produces a larger bill than the regular calculation, you pay the higher amount. In the phase-out range, AMT can add several percentage points to the effective marginal rate.
Countries That Do Use 45 Percent
The 45 percent number is real, just foreign. Several countries set their top personal income tax rate at exactly 45 percent, which is why the figure travels through English-language financial coverage.
The United Kingdom applies its 45 percent “additional rate” to annual income above £125,140, and eliminates the personal allowance entirely in that range, which sharpens the effective bite.6GOV.UK. Income Tax Rates and Personal Allowances Australia’s top marginal rate is also 45 percent, applying to taxable income above AUD $190,000 for the 2025–26 financial year.7Australian Taxation Office. Tax Rates – Australian Resident Finland’s top statutory rate reaches 45 percent as well.
If You’re an American Working Abroad
A U.S. citizen earning income in a 45 percent country doesn’t simply pay both that rate and the full U.S. tax on the same dollars. The Foreign Tax Credit lets you offset your U.S. liability by the foreign income taxes you already paid, claimed on Form 1116.8Internal Revenue Service. Foreign Tax Credit The credit cannot exceed your U.S. tax on that foreign income, so the arithmetic gets involved for high earners with income sourced in more than one country, but it prevents most straightforward double taxation.
Section 45 Is a Code Location, Not a Rate
Part of the confusion around “45 tax” comes from Internal Revenue Code numbering. Section 45 of the Code is the Renewable Electricity Production Credit, an incentive for businesses generating power from wind, geothermal, biomass, and other qualifying sources.9Office of the Law Revision Counsel. 26 USC 45 – Electricity Produced From Certain Renewable Resources Related provisions carry the same “45” in their citation: Section 45Q covers carbon capture and sequestration,10Office of the Law Revision Counsel. 26 US Code 45Q – Credit for Carbon Oxide Sequestration and Section 45R gives small employers a credit for offering health coverage.11Office of the Law Revision Counsel. 26 US Code 45R – Employee Health Insurance Expenses of Small Employers When those credits surface in the news, “Section 45” can read at a glance as “45 percent bracket.” The number is only a location in the Code.