Calculate exactly how much income tax you owe based on your earnings and filing status.
Supports US federal and UK income tax calculations using progressive tax brackets.
Your effective tax rate is lower than your marginal rate — you only pay the higher rate on income above each bracket threshold.
Use this calculator before major financial decisions with tax implications: taking on additional freelance income, structuring a business sale, deciding how much to draw from a pension, or evaluating whether pension contributions make sense at your marginal rate. For employed individuals, the salary calculator handles income tax automatically — this tool is more useful for standalone tax liability estimates and tax planning scenarios.
The most consequential misunderstanding is thinking that entering a higher tax bracket means the entire salary is taxed at the new rate. The bracket applies only to income above the threshold. At £52,000 UK income in 2024/25, only £1,730 is taxed at 40% — the rest of the income uses the lower bands. A second frequently missed point is the UK's Personal Allowance taper: above £100,000, the allowance reduces by £1 for every £2 earned, creating an effective 60% marginal rate on income between £100,000 and £125,140.
A freelancer earns £60,000 in a tax year. Their tax calculation runs as: £0 on the first £12,570 (personal allowance), £7,540 on £12,571–£50,270 (20%), and £3,892 on £50,271–£60,000 (40%). Total income tax: £11,432. Adding Class 4 NI (9% on £47,700 = £4,293), the total tax burden is £15,725 — an effective rate of 26.2%. Many freelancers are surprised their effective rate is not the 40% marginal rate they have heard quoted.
Progressive Income Tax
Tax = Σ (bracket rate × income in that bracket)
Each portion of income is taxed at its corresponding bracket rate. Only income above a threshold hits the higher rate.
Single filer earning $85,000 in the US (2024 rates).
Result: Total federal tax ≈
Tax is applied in brackets — a percentage of income within each range. Only income above each threshold is taxed at the higher rate.
Marginal rate is what you pay on your last dollar earned. Effective rate is your actual total tax as a percentage of all income.
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