Income Tax Calculator

Estimate your federal, state & local income tax burden

Updated for 2024 tax year on Dec 19, 2024

Income tax calculators by state

How to calculate your income tax burden

Federal income tax calculation

Benjamin Franklin once said: In this world nothing can be said to be certain, except death and taxes. All United States residents and citizens are subjected to income taxes, including investments, overseas incomes, etc. Not reporting and paying taxes is tax evasion and a criminal offence.

The tax year for individuals starts on January 1st and ends on December 31st of the same calendar year.

Federal income tax is calculated progressively, where those earning more pay a higher percentage of their income in taxes. Some states also have a progressive system, while others have a single tax rate for all income levels. In addition, eight states do not have an income tax, and one state (New Hampshire) does not have a wage income tax. Some counties, cities, and districts may also have a local income tax.

Besides income taxes, there are also payroll taxes at the federal and state levels. Social Security and Medicare, aka FICA, make up the federal payroll tax. State-level insurance taxes are only present in some states and are based on your taxable wage.

Calculate your income tax in 4 steps

There are four main steps to work out your total income tax liability.

Step 1 – Total federal income tax

No matter which state you reside in, you need to pay federal income tax.

Step 1.1 – Gross income adjusted

In this step, you must work out your gross income adjusted by removing retirement contributions from your total annual gross income. Contributions 401(k) and IRA are considered retirement contributions.

The formula is:
Gross income − Pre-tax deductions = Gross income adjusted

Step 1.2 – Federal taxable income

Now you have to calculate your federal taxable income to understand your federal income tax liability.

The formula is:
Gross income adjusted − Federal standard/itemized deductions = Federal taxable income

Step 1.3 – Federal income tax liability

Now you have to work out your tax liability. Different portions of your taxable income are taxed at different rates.

For example, if you’re a single filer with a taxable income of $50,000, your calculation will be:

• 10% on the first $11,000: $11,000 × 0.10 = $1,100
• 12% on the next $33,725: $33,725 × 0.12 = $4,047
• 22% on the next $5,275: $5,275 × 0.22 = $1,160.50
• Your total tax liability: $1,100 + $4,047 + $1,160.50 = $6,307.50

The formula is:
Federal taxable income × Federal income tax rate = Federal income tax liability

Step 1.4 – Federal payroll tax liability

Payroll tax is based on the taxable wage (gross income) hence the name. Unlike income tax, each payroll tax has a gross income ceiling. FICA consists of two taxes: Social Security and Medicare.

The formula is:
Gross income × Federal payroll tax rate = Federal payroll tax liability

Step 2 – Total state income tax

Some states have no payroll and income taxes. If you live in one, you can skip this step 🤘

Step 2.1 – State taxable income

Your state taxable income may be different from your federal taxable income. The key differences are:

1. Some states have different standard deductions
2. Some states still have personal exemptions (after the Tax Cuts and Jobs Act)

The formula is:
Gross income adjusted − (State standard/itemized deductions + State exemptions) = State taxable income

Step 2.2 – State income tax liability

Use your state taxable income to deprive your state income tax liability. Some states implement progressive income taxes while some are flat rates.

The formula is:
State taxable income × State income tax rate = State income tax liability

Step 2.3 – State payroll tax liability

Some states impose insurance tax and it is usually based on the taxable wage (gross income). The following is a list of state insurance:

• Long-Term Care Insurance
• Paid Family and Medical Leave (PFML)
• State Disability Insurance (SDI)
• State Unemployment Insurance (SUI)

The formula is:
Gross income × State payroll tax rate = State payroll tax liability

Step 3 – Local income tax

Some cities or counties impose local income tax. Local tax liability is usually based on state taxable income.

The formula is:
(Gross income adjusted or State taxable income) × Local income tax rate = Local income tax liability

Step 4 – Total income tax

The final step is to sum up all the income tax liabilities.

The formula is:
Federal income tax liability + Federal payroll tax liability + State income tax liability + State payroll tax liability + Local income tax liability = Your total income tax liability

Federal Insurance Contributions Act (FICA)

The two mandatory payroll taxes that make up the FICA tax are Social Security and Medicare, and employees and employers must contribute an equal amount to each tax. However, self-employed individuals are responsible for paying the full amount themselves.

Social Security

Medicare

Federal income tax brackets

The federal tax brackets differ every year as IRS adjusts them for inflation. For the latest on federal income tax brackets, refer to Tax Foundation.

Regards to state income tax brackets it varies from state to state. Some states have had the same rate for years, and some adjust their brackets every year.

Retirement contributions

There is an annual limit on how much you can contribute to your retirement funds.

The maximum employee 401(k) contribution limit for the tax year 2022 is $20,500 for those under 50 and $27,000 for those over 50 or older. For IRA contributions, the yearly limit is $6,000 ($7,000 if you’re age 50 or older) for the tax year 2022.

State standard deduction

You can use the standard deduction or itemize deductions in your income tax calculation. As a thumb of rule, if your itemized deductions are less than the standard deduction, it is wiser to claim the standard deduction amount.

For a list of itemizable deductions, refer to Dough Roller’s ultimate list.

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