Income Tax Calculator

The calculator follows the order of Form 1040: add up income, subtract adjustments to reach adjusted gross income, subtract the standard or itemized deduction and the newer special deductions, apply the tax brackets, then subtract credits and add other taxes such as self-employment tax. Comparing that total with your withholding and estimated payments gives the refund or balance due. With the default inputs, a single filer with $80,000 of wages in 2025 has $64,250 of taxable income after the $15,750 standard deduction and owes $9,049 of federal income tax, so $9,000 of withholding leaves $49 to pay.

Taxable Income

Federal income tax is charged on taxable income, not on everything you earn. Start with gross income from all sources, subtract certain adjustments, such as deductible IRA contributions, student loan interest and half of self-employment tax, to get adjusted gross income (AGI), then subtract deductions. Many credits and deductions phase out as AGI rises, so it is the most important number on the return after the tax itself.

Other Taxable Income

Wages are only the start. The IRS also taxes interest from bank accounts and bonds, dividends, rental and royalty income, profits from a business or freelance work, gambling winnings, alimony under divorce agreements signed before 2019, unemployment compensation, and distributions from traditional IRAs, 401(k)s and pensions. Up to 85% of Social Security benefits can be taxable once your other income plus half your benefits passes $25,000 for a single filer or $32,000 for a joint return.

Capital gains from selling investments, property or other assets are taxable when realized. Gains on assets held a year or less are short-term and taxed like wages; gains on assets held longer are long-term and, along with qualified dividends, are taxed at 0%, 15% or 20% depending on income. For 2025, a single filer pays 0% on long-term gains that fall within the first $48,350 of taxable income. Net capital losses offset gains and up to $3,000 of other income a year, with any remainder carried forward.

Self-employed people pay self-employment tax of 15.3% on 92.35% of net profit, covering both halves of Social Security and Medicare, in addition to income tax. Some income is excluded entirely, such as gifts and inheritances received, life insurance proceeds, child support, qualified Roth withdrawals, interest on most municipal bonds, and up to $250,000 ($500,000 for couples) of gain on the sale of a main home.

Exemptions

Before 2018, every taxpayer and dependent reduced taxable income by a personal exemption, $4,050 per person in 2017. The Tax Cuts and Jobs Act set the exemption to zero and offset the loss with a much larger standard deduction and child tax credit. The 2025 tax law made that change permanent, so exemptions no longer play a role in federal income tax, although some states still use them.

Tax Deductions

A deduction lowers the income that is taxed, so its value equals the deduction times your marginal rate: a $1,000 deduction saves $220 for someone in the 22% bracket. Deductions come in three groups.

Adjustments to income, sometimes called above-the-line deductions, are available whether or not you itemize. They include contributions to a traditional IRA (fully deductible unless you or your spouse have a workplace plan and income above the phase-out range), health savings account contributions, up to $2,500 of student loan interest, half of self-employment tax, self-employed health insurance premiums and retirement plan contributions, educator expenses of up to $300, and alimony paid under pre-2019 agreements.

The standard deduction is a flat amount that depends on filing status. For 2025 it is $15,750 for single filers and married people filing separately, $31,500 for married couples filing jointly and qualifying surviving spouses, and $23,625 for heads of household. For 2026 those figures rise to $16,100, $32,200 and $24,150. Taxpayers aged 65 or older or blind add an extra amount: $2,000 for single filers and heads of household and $1,600 per qualifying spouse for married couples in 2025.

Itemized deductions, claimed on Schedule A, replace the standard deduction when they add up to more. The main ones are state and local taxes, home mortgage interest, charitable contributions and large medical bills.

• State and local taxes (SALT): income or sales tax plus property tax. The 2025 law raised the cap from $10,000 to $40,000 for 2025 and $40,400 for 2026, half that for married filing separately, with the cap shrinking back toward $10,000 for incomes above $500,000 ($505,000 in 2026).
• Mortgage interest on up to $750,000 of acquisition debt for a main and second home ($1 million for loans taken out before December 16, 2017). Interest on home equity loans counts only when the money was used to buy, build or improve the home.
• Charitable gifts to qualified organizations, generally limited to 60% of AGI for cash. Starting in 2026, itemizers can deduct only the part of their giving above 0.5% of AGI, while non-itemizers can deduct up to $1,000 ($2,000 joint) of cash gifts.
• Medical and dental expenses above 7.5% of AGI.
• Casualty and theft losses from federally declared disasters, gambling losses up to gambling winnings, and a few other specialized items.

The 2025 tax law also created four temporary deductions for 2025 through 2028 that are claimed whether or not you itemize. Workers in occupations that customarily receive tips can deduct up to $25,000 of qualified tips. Workers who receive overtime pay required by the Fair Labor Standards Act can deduct the premium portion, up to $12,500 or $25,000 on a joint return. Both phase out by $100 for each $1,000 of income over $150,000 ($300,000 joint). Interest on a loan for a new car, SUV, pickup or motorcycle with final assembly in the US is deductible up to $10,000 a year, phasing out above $100,000 ($200,000 joint). And people aged 65 or older can deduct an extra $6,000 each, reduced by 6% of income above $75,000 ($150,000 joint). Married couples must file jointly to claim the tips, overtime and senior deductions.

Self-employed people and owners of pass-through businesses may also deduct up to 20% of qualified business income. The full rules include limits based on wages paid and the type of business at higher incomes; this calculator applies the basic 20% calculation.

Standard vs. Itemized Deductions

You can take the standard deduction or itemize, but not both. Itemize only when your itemized total is larger. Since the standard deduction nearly doubled in 2018, only around one in ten returns itemizes, mostly homeowners with large mortgages, people in high-tax states and generous donors. The higher SALT cap from 2025 makes itemizing worthwhile again for some households in high-tax areas.

A common strategy for people near the line is bunching: concentrating two or three years of charitable giving into one year, for example through a donor-advised fund, so that year's itemized deductions clear the standard deduction, then taking the standard deduction in the other years. Timing property tax payments or elective medical procedures can work the same way. Married couples filing separately must both itemize if either one does. The calculator compares both totals and uses whichever is larger.

Tax Credits

A credit reduces the tax itself, dollar for dollar, which makes it more valuable than a deduction of the same size. A $1,000 credit saves $1,000 regardless of bracket. Nonrefundable credits can reduce tax to zero but no further. Refundable credits can produce a refund even when no tax is owed, and some credits, such as the child tax credit and the American opportunity credit, are partly refundable. Most credits are aimed at specific groups or behaviors and phase out at higher incomes. The main categories follow.

Income

The earned income tax credit is the largest refundable credit for low- and moderate-income workers. Its size depends on earned income, filing status and the number of qualifying children, and for 2025 it reaches up to about $8,000 for a family with three or more children. Investment income above a set limit disqualifies a taxpayer. The saver's credit rewards lower-income workers who contribute to an IRA or workplace plan with a credit of 10%, 20% or 50% of up to $2,000 of contributions per person. The calculator does not estimate these credits.

Children

The child tax credit is $2,200 for each child under 17 for 2025, with up to $1,700 of it refundable for families who owe little tax, and the amount is indexed for inflation from 2026. Other dependents, such as older children in college or a parent you support, qualify for a $500 credit. Both phase out by $50 for each $1,000 of AGI above $200,000, or $400,000 on a joint return. The child and dependent care credit covers 20% to 35% of up to $3,000 of care costs for one child under 13 or $6,000 for two or more, so parents can work; from 2026 the top rate rises to 50% for lower incomes. The adoption credit covers qualified adoption expenses up to a yearly limit.

Education & Retirement

The American opportunity tax credit is worth up to $2,500 per eligible student for each of the first four years of college: 100% of the first $2,000 of tuition, fees and course materials and 25% of the next $2,000. Up to 40% of it is refundable. It phases out between $80,000 and $90,000 of modified AGI for single filers and $160,000 to $180,000 for joint filers. The lifetime learning credit is worth 20% of up to $10,000 of expenses per return, for any year of college, graduate school or job-skills courses, and it is nonrefundable. You cannot claim both credits for the same student in the same year.

On the retirement side, besides the saver's credit, small employers can claim credits for the cost of starting a retirement plan and for adding automatic enrollment. Contributions to traditional IRAs and workplace plans lower taxable income directly, while Roth contributions provide tax-free income later.

Environmental

For 2025, homeowners can claim 30% of the cost of qualified energy improvements such as heat pumps, insulation, windows and doors, up to $3,200 a year, and 30% of the cost of solar panels, solar water heaters, geothermal heat pumps and battery storage with no annual cap. The 2025 tax law ended these home credits for property placed in service after December 31, 2025, and ended the clean vehicle credits for new and used electric vehicles acquired after September 30, 2025.

Alternative Minimum Tax (AMT)

The alternative minimum tax is a parallel tax system designed to ensure that high-income taxpayers who use many deductions and preferences still pay a minimum amount. You compute tax both ways and pay whichever is higher. The AMT adds back items such as state and local taxes and the exercise spread on incentive stock options, subtracts an exemption, then applies rates of 26% and 28%.

For 2025, the exemption is $88,100 for single filers and $137,000 for joint filers, and it phases out at 25 cents per dollar of AMT income above $626,350 and $1,252,700. Starting in 2026, the phase-out begins at $500,000 and $1,000,000 and runs at 50 cents per dollar, which brings more high earners into the AMT. Because the regular standard deduction is now so large and the SALT add-back is capped, few middle-income households owe AMT. Common triggers are exercising and holding incentive stock options, large amounts of private activity bond interest and very large itemized deductions. This calculator does not compute the AMT.

Frequently asked questions

Sources

• IRS – Federal income tax rates and brackets
• IRS – One, Big, Beautiful Bill provisions
• IRS – Credits and Deductions for Individuals