How it's calculated
This calculator estimates your 2026 federal income tax the way Form 1040 does, rather than the way payroll withholds it. It adds up your income, subtracts pre-tax payroll deductions and adjustments to reach adjusted gross income, subtracts the standard or itemized deduction and the new deductions created by P.L. 119-21, and applies the 2026 tax brackets to what is left. Then it subtracts the child tax credit and credit for other dependents.
If you enter the federal tax withheld from your pay this year (box 2 of your W-2, or year-to-date on your last pay stub), it compares that with your tax to estimate a refund or balance due.
The brackets, standard deduction and other inflation-adjusted amounts come from IRS Revenue Procedure 2025-32.IRS The new deductions follow the IRS's guidance on the 2025 law.IRS
The formula
- Gross income = wages + other taxable income.
- Adjusted gross income (AGI) = wages − pre-tax payroll contributions + other income − adjustments.
- Deduction = the standard deduction for your filing status ($16,100 single, $32,200 married filing jointly, $24,150 head of household) plus $2,050 (unmarried) or $1,650 (married) for each box checked for age 65 or blindness; or your itemized total, reduced by the 2026 limit on itemized deductions for the top bracket.
- Schedule 1-A deductions, each with its own phase-out based on modified AGI:
- qualified tips, up to $25,000;
- qualified overtime premium, up to $12,500 ($25,000 joint);
- the senior deduction, $6,000 per person 65 or older, reduced by 6% of modified AGI above $75,000 ($150,000 joint).
- Charitable deduction for non-itemizers = cash gifts up to $1,000 ($2,000 joint), only with the standard deduction.
- Taxable income = AGI − deduction − charitable deduction − Schedule 1-A deductions (not below zero).
- Tax before credits = taxable income run through the 2026 tax rate schedule for your filing status.
- Credits = $2,200 per child under 17 + $500 per other dependent, reduced by $50 for each thousand dollars (or part of a thousand) of modified AGI above $200,000 ($400,000 joint), and limited to the tax.
- Total tax = tax before credits − credits.
- Refund (+) or amount owed (−) = tax withheld + refundable additional child tax credit − total tax.
The refundable part of the child tax credit (up to $1,700 per child) is figured on Schedule 8812 from earned income above $2,500, at 15%.
Worked example
A married couple filing jointly with $95,000 of wages, $4,000 of 401(k) contributions taken out pre-tax, two children under 17, and $5,000 of federal tax withheld during the year:
| Line | 2026 |
|---|---|
| Wages and salary | $95,000 |
| Pre-tax contributions | -$4,000 |
| Adjusted gross income | $91,000 |
| Standard deduction | -$32,200 |
| Taxable income | $58,800 |
| Tax before credits | $6,560 |
| Child tax credit | -$4,400 |
| Federal income tax | $2,160 |
| Tax withheld | $5,000 |
| Estimated refund | $2,840 |
Their 2026 federal income tax comes to $2,160, an effective rate of 2.3% of gross income, with a marginal rate of 12%. Compared with what was withheld, the estimate is $2,840 (a positive number is a refund).
Assumptions and limitations
- Ordinary income only. Long-term capital gains and qualified dividends are taxed at lower rates on a real return; here, anything entered as other income is taxed at ordinary rates.
- Not modeled: the alternative minimum tax, net investment income tax, self-employment tax, Additional Medicare Tax on the return, the earned income tax credit, education and other credits, and the qualified business income deduction.
- Tax rate schedules, not the Tax Table. If your taxable income falls in the range covered by the IRS Tax Table, your return uses the table's small income bands instead of the exact formula, so it can differ by a few dollars.
- Itemized deductions should be entered after the Schedule A limits (such as the cap on state and local taxes and the floors on medical and charitable deductions). The calculator applies only the overall limit for the top bracket.
- Car loan interest. The new deduction for interest on a qualifying vehicle loan is not an input here; if you have it, include it in "Adjustments to income" as an approximation.
- Modified AGI is treated as equal to AGI, which is true for most people (exceptions involve foreign income exclusions).
- Larger families. With three or more children, Schedule 8812 can allow a bigger refundable credit through an alternative calculation that is not modeled.
- Married filing separately is supported for brackets, but the new deductions for tips, overtime and seniors require a joint return if you are married.
- Federal only. State and local income taxes are not included; use the paycheck calculator or your state's page.
This is an estimate for planning, not a tax return. Our methodology explains how the figures are sourced and tested.