What Is the Statutory Tax Rate and How Is It Calculated?

A statutory tax rate is the percentage of tax written directly into law: the number Congress or a state legislature votes on and codifies in the tax code. For 2026, federal statutory rates on individual income run from 10 percent to 37 percent, C-corporations pay a flat 21 percent, and long-term capital gains are taxed at 0, 15, or 20 percent depending on income. These headline figures set the ceiling on paper. What you actually pay almost always ends up lower, because deductions, credits, and exemptions shrink the bill before it reaches the IRS.

Statutory, Effective, and Marginal Rates

The statutory rate is the legally prescribed percentage that applies to a defined tax base, typically taxable income, before credits or adjustments. It is the figure printed in the Internal Revenue Code. Think of it as a sticker price: it tells you the listed cost, but almost nobody pays that exact amount.

Two related terms cause frequent confusion. Your effective tax rate is the percentage of total income you actually pay after applying deductions, credits, and exemptions. Earn $100,000 and pay $15,000 in federal income tax after all adjustments, and your effective rate is 15 percent, even if your top statutory bracket is 22 percent. Your marginal tax rate is the statutory rate that applies to your last dollar of income. In a straightforward case the marginal rate equals the statutory rate for that bracket, though phase-ins and phaseouts of credits can push the true marginal rate above or below what the bracket suggests.

2026 Federal Individual Income Tax Brackets

Federal income tax uses a progressive structure spelled out in 26 U.S.C. Section 1. Seven statutory rates apply to slices of taxable income rather than to your total earnings as a single flat percentage.¹ The One, Big, Beautiful Bill Act, signed on July 4, 2025, extended the rate structure originally set by the 2017 Tax Cuts and Jobs Act, which had been scheduled to expire after 2025.² The IRS adjusts the dollar thresholds each year for inflation, so the brackets widen slightly while the percentages stay the same.

For tax year 2026, the brackets for single filers and married couples filing jointly are:³

10 percent on taxable income up to $12,400 (single) or $24,800 (jointly)
12 percent from $12,400 to $50,400 (single) or $24,800 to $100,800 (jointly)
22 percent from $50,400 to $105,700 (single) or $100,800 to $211,400 (jointly)
24 percent from $105,700 to $201,775 (single) or $211,400 to $403,550 (jointly)
32 percent from $201,775 to $256,225 (single) or $403,550 to $512,450 (jointly)
35 percent from $256,225 to $640,600 (single) or $512,450 to $768,700 (jointly)
37 percent above $640,600 (single) or $768,700 (jointly)

These rates apply only to taxable income, meaning the amount left after subtracting either the standard deduction or itemized deductions. For 2026 the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.³ A single filer earning $65,000 in gross income would subtract the $16,100 standard deduction to reach $48,900 in taxable income, placing the top slice in the 12 percent bracket, not the 22 percent bracket.

Federal Corporate Tax Rate

C-corporations pay a flat statutory rate of 21 percent on all taxable income, no matter how much or how little the company earns. Before the 2017 Tax Cuts and Jobs Act, the corporate code used a graduated system that ranged from 15 percent on the first $50,000 of income up to 35 percent on income above $10 million.⁴ The flat 21 percent rate replaced that structure.

Capital Gains Tax Rates

Long-term capital gains, meaning profits on assets held longer than one year, are taxed under a separate rate schedule rather than the ordinary income brackets. Section 1(h) of the Internal Revenue Code establishes three statutory tiers: 0, 15, and 20 percent.¹ Short-term capital gains on assets held one year or less are taxed at whatever ordinary income rate applies to the rest of your income.

For 2026, the long-term capital gains thresholds based on taxable income are:

0 percent up to $49,450 (single) or $98,900 (jointly)
15 percent from $49,450 to $545,500 (single) or $98,900 to $613,700 (jointly)
20 percent above $545,500 (single) or $613,700 (jointly)

High earners face an additional 3.8 percent net investment income tax on the lesser of their net investment income or the amount by which modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly.⁵ The surtax applies to interest, dividends, capital gains, rental income, and royalties. Combined with the 20 percent top capital gains rate, the highest federal statutory rate on investment income reaches 23.8 percent before any state taxes.

Payroll and Self-Employment Tax Rates

Statutory rates extend well beyond income taxes. Every paycheck is subject to Federal Insurance Contributions Act (FICA) taxes that fund Social Security and Medicare, split equally between employee and employer.

Employees pay a combined 7.65 percent of wages: 6.2 percent for Social Security and 1.45 percent for Medicare.⁶ Employers match that 7.65 percent, bringing the total statutory burden on each dollar of wages to 15.3 percent. The Social Security portion applies only to earnings up to $184,500 in 2026; wages above that ceiling are exempt from the 6.2 percent tax but still subject to Medicare.⁷ An additional 0.9 percent Medicare surtax applies to individuals earning more than $200,000 ($250,000 for married couples filing jointly), and only the employee pays it.

Self-employed individuals pay both halves, for a combined statutory rate of 15.3 percent on net self-employment earnings: 12.4 percent for Social Security up to $184,500 and 2.9 percent for Medicare with no income cap.⁸ The same 0.9 percent additional Medicare tax applies above the $200,000/$250,000 thresholds. The code lets self-employed workers deduct the employer-equivalent half of the tax when calculating adjusted gross income.

Alternative Minimum Tax Rates

The alternative minimum tax is a parallel calculation designed to make sure taxpayers who benefit from large deductions or exclusions still pay a minimum amount. It uses its own statutory rates: 26 percent on the first portion of alternative minimum taxable income above the exemption, and 28 percent on the remainder.⁹ For 2026, the AMT exemption is $90,100 for single filers and $140,200 for joint filers, and the 28 percent rate begins at $244,500 of income above the exemption.³ You owe AMT only if the tentative minimum tax exceeds your regular tax liability.

State and Local Statutory Rates

State and local governments set their own statutory rates independently of the federal system. Your total obligation is the sum of federal, state, and any local taxes based on where you live or do business.

State individual income tax rates range from zero to over 13 percent. Eight states impose no individual income tax at all. Others use either a flat rate applied to all income or a progressive bracket structure similar to the federal model. The rates are found in each state’s revenue code rather than the Internal Revenue Code.

Most states also tax corporate income, with top statutory rates running roughly from 2 percent to about 11.5 percent. A handful rely on gross receipts taxes or impose no corporate income tax. These state-level rates stack on top of the 21 percent federal rate, though corporations can deduct state taxes as a business expense when calculating federal taxable income. State sales tax rates run from zero in five states to 7.25 percent at the high end, before local add-ons.

How the Statutory Rate Turns Into a Tax Bill

Under a progressive system, you work through each bracket one at a time. Take a single filer with $90,000 in taxable income for 2026. You would not simply multiply $90,000 by 22 percent. The first $12,400 is taxed at 10 percent, the next slice from $12,400 to $50,400 at 12 percent, and the remaining amount from $50,400 to $90,000 at 22 percent.³ Added together, the statutory tax on $90,000 comes to roughly $14,548, an effective rate of about 16.2 percent, well below the 22 percent top bracket.

For a C-corporation the arithmetic is simpler: multiply taxable income by 21 percent.⁴ A company with $500,000 in taxable income owes $105,000 in federal corporate tax before credits.

Either calculation produces a gross tax figure. Credits like the child tax credit, education credits, or the foreign tax credit are subtracted from that figure to arrive at what you actually owe. That net amount is then compared against taxes already withheld or paid through estimated payments during the year, which determines whether you get a refund or owe a balance.

1
Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed
2
Internal Revenue Service. One, Big, Beautiful Bill Provisions
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
4
Office of the Law Revision Counsel. 26 USC 11 – Tax Imposed
5
Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax
6
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
7
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
8
Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
9
Office of the Law Revision Counsel. 26 USC 55 – Alternative Minimum Tax Imposed