Income Tax Calculator
Use our income tax calculator to estimate your federal and state tax liability based on your income, filing status, deductions, and tax credits. See your effective tax rate, marginal tax rate, and after-tax income.
Income Tax Calculator
Enter your income details and click Calculate to estimate your tax liability
Enter your gross annual income before taxes
Select your tax filing status
Enter your total deductions (standard or itemized)
Enter your total tax credits
Select your state of residence
Select the tax year for calculation
What is Income Tax?
Income tax is a tax imposed on individuals or entities that varies with respective income or profits. Income tax generally is computed as the product of a tax rate times taxable income. Taxation rates may vary by type or characteristics of the taxpayer.
Most countries employ a progressive income tax system in which higher-income earners pay a higher tax rate compared to their lower-income counterparts. The primary purpose of income taxes is to fund government operations, public services, and social programs.
Types of Income Tax Systems
Progressive Tax
A progressive tax system imposes a higher tax rate on higher-income earners and a lower tax rate on lower-income individuals. This is the most common system used in most developed countries, including the United States.
Flat Tax
A flat tax system applies the same tax rate to everyone regardless of income level. Some countries and certain U.S. states use this approach for simplicity, though it's less common for federal income taxes.
Regressive Tax
A regressive tax takes a larger percentage of income from low-income earners than from high-income earners. Sales taxes and property taxes often function as regressive taxes in practice.
Income Tax Calculation Formula
The basic formula for calculating income tax in a progressive tax system involves applying different tax rates to different portions of your income:
In this formula, your income is divided into different tax brackets, each with its own tax rate. You pay the specified rate only on the portion of your income that falls within each bracket. This is why understanding your marginal tax rate (the rate applied to your last dollar of income) differs from your effective tax rate (the average rate you pay across all your income).
Tax Deductions and Credits
Tax deductions reduce your taxable income before calculating your tax liability, while tax credits directly reduce the amount of tax you owe. Understanding available deductions and credits is crucial for minimizing your tax burden legally.
Common Tax Deductions
- Standard deduction or itemized deductions
- Mortgage interest
- State and local taxes (SALT)
- Charitable contributions
- Medical expenses exceeding a certain percentage of income
How to Use the Income Tax Calculator
- Enter your annual gross income before any taxes or deductions.
- Select your filing status (Single, Married Filing Jointly, or Head of Household).
- Enter your total deductions, including standard or itemized deductions.
- Add any tax credits you're eligible for.
- Select your state of residence and tax year, then click 'Calculate'.
The calculator will show your estimated federal and state tax liability, effective tax rate, marginal tax rate, and after-tax income. Remember that this calculator provides estimates only and should not replace professional tax advice.
Tax Planning Tips
- Maximize retirement contributions to reduce taxable income.
- Consider timing your income and deductions strategically.
- Keep thorough records of all potential deductions throughout the year.
- Understand the difference between tax deductions and tax credits.
- Consult with a tax professional for personalized advice based on your specific situation.