Understanding how your income tax is calculated is essential for financial planning. Whether you're a salaried employee, freelancer, or just curious about your take home pay, this guide walks you through every step of calculating your 2026 federal and state income tax.
For a quick estimate, use our free After Tax Calculator — it handles all the math for you in seconds.
1. Start With Your Gross Annual Income
Your gross income is your total annual earnings before any taxes or deductions. If you're a W-2 employee, this is the number on your job offer or your annual salary. For freelancers, it's your total business income before expenses.
Example: Sarah earns $80,000 per year as a marketing manager in California.
2. Subtract the Standard Deduction
For 2026, the IRS standard deduction increased under Rev. Proc. 2025-32:
- Single: $16,100
- Married Filing Jointly: $32,200
- Head of Household: $24,100
Your taxable income is your gross income minus the standard deduction. Sarah (single, $80,000) subtracts $16,100 for a taxable income of $63,900.
If your itemized deductions (mortgage interest, charitable donations, state taxes) exceed the standard deduction, you can itemize instead.
3. Apply Federal Tax Brackets (2026)
The US uses a progressive tax system — you pay different rates on different portions of your income. For 2026, the brackets for single filers are:
| Rate | Taxable Income Range |
|---|---|
| 10% | $0 – $11,925 |
| 12% | $11,926 – $48,475 |
| 22% | $48,476 – $103,350 |
| 24% | $103,351 – $197,300 |
| 32% | $197,301 – $250,525 |
| 35% | $250,526 – $626,350 |
| 37% | $626,351+ |
Sarah's taxable income of $63,900 falls into three brackets:
- First $11,925 → 10% = $1,192.50
- $11,926 to $48,475 ($36,550) → 12% = $4,386.00
- $48,476 to $63,900 ($15,425) → 22% = $3,393.50
Total federal income tax: $1,192.50 + $4,386.00 + $3,393.50 = $8,972.00
4. Add FICA Taxes (Social Security & Medicare)
FICA taxes apply to your gross income (not taxable income):
- Social Security: 6.2% on income up to $184,500 (2026 limit)
- Medicare: 1.45% on all income
- Additional Medicare: 0.9% on income over $200,000 (single)
Sarah's FICA: $80,000 × 6.2% = $4,960 (SS) + $80,000 × 1.45% = $1,160 (Medicare) = $6,120
5. Calculate State Income Tax
State income tax varies widely. Some states have no income tax (Texas, Florida, Nevada, etc.), while others like California have progressive brackets up to 13.3%. Many states use flat tax rates.
Sarah in California owes approximately $2,450 in state income tax on her $80,000 salary.
6. Your Take Home Pay
Sarah's monthly take home pay:
- Gross annual: $80,000
- Federal income tax: −$8,972
- FICA: −$6,120
- California state tax: −$2,450
- Net annual: $62,458
- Monthly take home: $5,205
Try Our Free Tax Calculator
Don't want to do the math yourself? Use our After Tax Calculator — enter your salary and state, and get your take home pay instantly. Works for all 50 states, all filing statuses, and all income levels.