Federal Tax Guide (2026)
How federal taxes affect your paycheck. Federal income tax, Social Security, Medicare, and other wage-related taxes explained in plain English.
Last updated: January 6, 2026
- •Federal income tax uses progressive brackets—different portions of your income are taxed at different rates, not your entire income at one rate.
- •FICA taxes (Social Security 6.2% and Medicare 1.45%) are flat rates with no deductions. Social Security stops after you hit the wage base, but Medicare continues on all income.
- •Withholding is an estimate. Your employer withholds taxes throughout the year, but your actual tax liability is calculated when you file your return.
- •Pre-tax deductions like 401(k) contributions reduce your taxable income (saving taxes) but still reduce your take-home pay because the money is deducted from your paycheck.
How federal taxes affect your paycheck
Federal taxes are the largest component of most Americans' tax burden. Every paycheck, your employer withholds federal income tax, Social Security tax, and Medicare tax based on your income, filing status, and W-4 information.
Key Takeaway
Withholding is an estimate. Your employer calculates withholding based on assumptions about your annual income. When you file your tax return, your actual tax liability is calculated based on your total income, deductions, and credits.
- You may receive a refund if too much was withheld
- You may owe additional tax if too little was withheld
- Federal taxes directly reduce your take-home pay
Federal income tax
Federal income tax uses a progressive bracket system. Different portions of your income are taxed at different rates, not your entire income at one rate.
Important
These brackets apply to your taxable income after the standard deduction. The standard deduction for 2026 is $16,100 for single filers and $32,200 for married filing jointly.
Single filers
| Taxable Income | Rate |
|---|---|
| $0 - $12,400 | 10.0% |
| $12,400 - $50,400 | 12.0% |
| $50,400 - $103,350 | 22.0% |
| $103,350 - $197,300 | 24.0% |
| $197,300 - $250,525 | 32.0% |
| $250,525 - $626,350 | 35.0% |
| Over $626,350 | 37.0% |
Married filing jointly
| Taxable Income | Rate |
|---|---|
| $0 - $24,800 | 10.0% |
| $24,800 - $100,800 | 12.0% |
| $100,800 - $206,700 | 22.0% |
| $206,700 - $394,600 | 24.0% |
| $394,600 - $501,050 | 32.0% |
| $501,050 - $751,600 | 35.0% |
| Over $751,600 | 37.0% |
Good to Know
Additional Medicare Tax
High earners pay an additional 0.9% Medicare tax on income above certain thresholds. This only applies to the portion above the threshold, not your entire income.
High earners pay an additional 0.9% Medicare tax on income above certain thresholds. This only applies to the portion above the threshold, not your entire income.
| Filing Status | Threshold (2026) | Additional Rate |
|---|---|---|
| Single | $200,000 | 0.9% |
| Married filing jointly | $250,000 | 0.9% |
| Head of household | $200,000 | 0.9% |
Tip
Supplemental wages: bonuses, RSUs, and commissions
Bonuses, commissions, and RSUs are subject to the same federal income tax rates as regular wages. However, employers use different withholding methods that can make supplemental wages appear to be taxed at a higher rate.
Bonuses, commissions, and RSUs are subject to the same federal income tax rates as regular wages. However, employers use different withholding methods that can make supplemental wages appear to be taxed at a higher rate.
| Supplemental Wage Type | Federal Withholding Rate |
|---|---|
| Bonuses, commissions, RSUs (under $1M) | 22.0% |
| Bonuses, commissions, RSUs (over $1M) | 37.0% |
Why This Surprises People
Flat rate method: Withholds 22.0% for federal income tax (or 37.0% for amounts over $1 million). Aggregate method: Adds the bonus to your regular paycheck and calculates withholding as if you earn that amount every pay period.
Retirement & pre-tax deductions
Pre-tax retirement contributions reduce your taxable income for federal income tax, which means you pay less federal income tax. However, they don't reduce FICA taxes—Social Security and Medicare are still calculated on your gross pay.
Pre-tax retirement contributions reduce your taxable income for federal income tax, which means you pay less federal income tax. However, they don't reduce FICA taxes—Social Security and Medicare are still calculated on your gross pay.
| Account Type | Regular Limit (2026) | Catch-Up (50+) |
|---|---|---|
| 401(k) | $23,000 | $30,500 |
| 403(b) | $23,000 | $30,500 |
| HSA (individual) | $4,150 | — |
| HSA (family) | $8,300 | — |
Tip
Impact on take-home pay: Pre-tax deductions reduce your taxable income (saving taxes) but still reduce your take-home pay because the money is deducted from your paycheck. The tax savings make them worthwhile, but your net pay is still lower.
Employer-only taxes (for reference)
Some taxes are paid by your employer, not deducted from your paycheck. Understanding these helps you see the full picture of payroll taxes.
Some taxes are paid by your employer, not deducted from your paycheck. Understanding these helps you see the full picture of payroll taxes.
| Tax | Rate | Wage Base |
|---|---|---|
| FUTA (Federal Unemployment) | 0.6% | $7,000 |
Social Security & Medicare (FICA)
FICA taxes fund Social Security and Medicare. Unlike income tax, these are flat rates with no deductions. They're calculated on your gross pay before pre-tax deductions like 401(k) contributions.
FICA taxes are split between you and your employer. You pay 6.2% for Social Security and 1.5% for Medicare. Your employer matches these amounts.
Why This Surprises People