Marginal vs Effective Tax Rate Calculator

People often say "I'm in the 24% bracket" as if all their income is taxed at 24%. It isn't. Your marginal rate is what you pay on your last dollar; your effective rate is your average across all income. Knowing the difference helps with real decisions, like whether an extra shift or a bigger retirement contribution is worth it.

What this calculator does

Enter your gross W-2 income, pre-tax retirement contributions, filing status, state tax rate and a possible raise or extra income. It shows:

• your federal marginal rate (top bracket),
• your effective federal income tax rate,
• your effective rate including Social Security, Medicare and state tax, and
• how much of the raise you'd keep, in dollars and as a share.

The chart shows how much federal tax you pay in each bracket.

The formula in plain English

Taxable income = gross income − pre-tax retirement contributions − the 2026 standard deduction.

Federal tax is calculated bracket by bracket: 10% on the first slice, 12% on the next, and so on. Your marginal rate is the rate on the highest slice you reach.

Effective federal rate = federal income tax ÷ gross income.

Effective total rate = (federal tax + Social Security and Medicare + state tax) ÷ gross income.

Raise kept = take-home with the raise − take-home now.

A worked example

Jordan, a single pharmacist, earns $150,000, contributes $10,000 to a 401(k) and pays about 5% state tax.

• Taxable income: $150,000 − $10,000 − $16,100 = $123,900.
• Marginal federal rate: 24%.
• Effective federal rate: about 15%.
• Effective total rate, including FICA and state: about 27%.
• A $10,000 raise would add about $6,335 to take-home, or about 63%.

Jordan's 401(k) contribution saves 24% federal plus 5% state on each dollar, about $2,900 a year in taxes, because it comes off the top at his marginal rate.

Why it matters at each career stage

If you're: Resident / fellow

Residents usually have low marginal rates. That makes Roth contributions especially attractive: you pay tax now at 12% or 22% instead of potentially higher rates later.

If you're: Employed

After training, your marginal rate jumps. Pre-tax retirement contributions, HSAs and other deductions save more per dollar. When deciding on extra shifts or side work, use your marginal rate plus payroll and state tax to see what you'd really keep.

If you're: Practice owner

Business owners face extra layers, like self-employment tax and the qualified business income deduction. Use this as a starting point, then talk with a CPA about your full picture.

Using your rates in decisions

Extra shifts and moonlighting. Multiply the extra pay by 1 minus your combined marginal rate (federal + state + payroll) to estimate what you'd keep.

Retirement contributions. Each pre-tax dollar saves your marginal federal and state rate in income tax now.

Roth vs traditional. Compare your marginal rate now with what you expect in retirement.

Charitable giving. If you itemize, each dollar given saves your marginal rate.

Why the effective rate is lower

Most people's effective rate is far below their marginal rate, for two reasons. The standard deduction means the first $16,100 (single) or $32,200 (married filing jointly) of income isn't taxed at all. And the lower brackets tax the first slices of income at 10% and 12%, even for high earners. So even someone in the 35% bracket usually pays an average federal rate in the low-to-mid 20s.

A note on "tax bracket creep"

Federal brackets are adjusted for inflation each year, but state brackets and some thresholds, like the Additional Medicare Tax threshold, aren't. Over time, more of your income may fall into higher-taxed ranges even if your real income hasn't changed. Running this calculator each year helps you keep your assumptions current.

Next, see your full take-home pay, compare Roth vs traditional contributions, or check your 403(b) savings.