Taxable Income Calculator

Your federal income tax is not figured on your salary. It is figured on taxable income, a number that sits several steps below gross pay on Form 1040. This calculator walks through those steps for tax year 2025 (the return you file in 2026) or tax year 2026 (filed in 2027) and shows each subtraction. If you only need the AGI part, the AGI Calculator stops there; to see how a joint return compares with two single returns, use the Marriage Tax Calculator.

The taxable income formula

Taxable income comes out of three subtractions, and the 2025 Form 1040 lays them out in this order:

On the 2025 form, total income is line 9, AGI is line 11a, the standard or itemized deduction is line 12e, the qualified business income (QBI) deduction is line 13a, the new Schedule 1-A deductions are line 13b and taxable income is line 15. If the subtraction gives zero or less, line 15 is zero. Everything the tax brackets touch starts from that line.

Step 1: total income, and what stays out

Total income collects the taxable amounts from each source: wages, taxable interest, ordinary dividends, business profit or loss, capital gains, the taxable part of IRA and pension distributions, the taxable part of Social Security benefits and other income such as unemployment benefits or gambling winnings. Several things never get there. Pre-tax 401(k), 403(b) and 457 deferrals are left out of box 1 of your W-2, so they reduce wages before anything else happens. Tax-exempt interest is reported on line 2a but is not added to total income. Only the taxable part of Social Security counts, which can be none, up to 50% or up to 85% of your benefits.

Two details matter for investors. Qualified dividends are part of ordinary dividends, not an extra amount, so the calculator caps them at the ordinary dividend figure. And a net capital loss can reduce other income by only $3,000 a year ($1,500 if married filing separately); the rest carries forward.

Step 2: adjustments that turn total income into AGI

Adjustments are subtracted whether or not you itemize. The calculator handles four of them:

• Half of self-employment tax. Net business profit times 92.35% is taxed at 12.4% up to the Social Security wage base ($176,100 for 2025, $184,500 for 2026, minus any W-2 wages) and 2.9% on all of it. Half of that self-employment tax is deductible.
• Traditional IRA contributions. The limit is $7,000 for 2025 and $7,500 for 2026, plus $1,000 or $1,100 at age 50 or older. If you or your spouse has a workplace plan, the deduction phases out; for 2026 the range is $81,000 to $91,000 for a covered single filer and $129,000 to $149,000 for a covered spouse filing jointly. Enter only the deductible part.
• HSA contributions. Up to $4,300 self-only or $8,550 family coverage for 2025, and $4,400 or $8,750 for 2026. Payroll contributions through a cafeteria plan are already out of box 1; direct contributions are deducted here. Either way they reduce AGI.
• Student loan interest. Up to $2,500, reduced as modified AGI rises from $85,000 to $100,000 for single filers. For joint returns the range is $170,000 to $200,000 for 2025 and $175,000 to $205,000 for 2026. Married filing separately cannot take it.

Pre-tax 401(k) deferrals are technically an exclusion rather than an adjustment, but the effect on AGI is the same: the 2026 limit is $24,500 per person, plus $8,000 at age 50 or older and $11,250 at ages 60 to 63.

Step 3: standard deduction or itemized deductions

Moving from AGI to taxable income starts with the larger of two deductions. The standard deduction depends on your filing status, your age and whether you are blind:

A joint return with both spouses 65 or older adds the extra amount twice: $34,700 for 2025 and $35,500 for 2026. Being blind adds the same amount again. Itemized deductions replace the standard deduction when they are larger:

• Medical and dental expenses above 7.5% of AGI.
• State and local taxes (SALT): income or sales tax plus property tax, capped at $40,000 for 2025 and $40,400 for 2026 ($20,000 and $20,200 if married filing separately). The cap shrinks by 30% of income above $500,000 for 2025 and $505,000 for 2026 (half those thresholds for separate returns), but never below $10,000 ($5,000).
• Home mortgage interest on up to $750,000 of acquisition debt ($375,000 if married filing separately). For 2026, qualified mortgage insurance premiums are deductible again.
• Charitable gifts. For 2026 only the part above 0.5% of AGI counts if you itemize, while people who take the standard deduction can add up to $1,000 ($2,000 joint) of cash gifts on top of it.

For 2026 there is one more step at the top: if AGI minus the QBI and Schedule 1-A deductions exceeds the start of the 37% bracket ($640,600 single, $768,700 joint), itemized deductions are cut by 5.4% of the smaller of the itemized total or that excess, as in the IRS estimated tax worksheet. If you are married filing separately and your spouse itemizes, you must itemize too, even with a smaller total.

Step 4: the QBI deduction and the new Schedule 1-A deductions

Owners of sole proprietorships and other pass-through businesses can deduct 20% of qualified business income: net profit reduced by the deductible half of self-employment tax and similar business-related deductions. In the simple case on Form 8995 the deduction is the smaller of that 20% or 20% of taxable income before the QBI deduction minus net capital gain and qualified dividends. The simple case applies when taxable income before the deduction is at most $197,300 ($394,600 joint) for 2025 and $201,750 ($403,500 joint, $201,775 separate) for 2026; above that, wage, property and specified service business limits can reduce it. From 2026, anyone with at least $1,000 of qualified business income from an active business gets at least $400.

Schedule 1-A adds four deductions for 2025 through 2028, all subtracted after AGI and available whether or not you itemize. Each has its own cap and phase-out based on modified AGI (MAGI), which for most people equals AGI:

The last column is the MAGI at which the maximum amount disappears completely; a smaller deduction disappears sooner. The overtime deduction covers only the premium part of overtime pay, the extra half in time-and-a-half, not the whole overtime check. The car loan deduction needs a new vehicle with final assembly in the United States, a loan taken out after 2024 and personal use. Schedule 1-A requires married couples to file jointly for the tips, overtime and senior deductions, and for a joint return with two people aged 65 or older each spouse's $6,000 is reduced separately.

Worked example: a single employee in 2026

Maya earns $85,000 in wages, defers $6,000 into a pre-tax 401(k) and has no other income or adjustments. Her W-2 box 1 shows $79,000, which is her total income and her AGI. She has no itemized deductions worth mentioning, so she takes the $16,100 standard deduction for 2026:

Her top bracket is 22%, but only the last $12,500 is taxed at that rate, so her tax is about 10.8% of total income. With the same pay in 2025 her taxable income would be $63,250 and the tax $8,829, because the 2025 standard deduction and brackets are lower. Her $6,000 deferral saves her $1,320 this year: $6,000 times her 22% rate.

More worked examples: retirees and a side business

A retired couple in 2026

Ruth and Daniel, both over 65, file jointly. They have $70,000 of taxable IRA and pension distributions, $25,500 of taxable Social Security, $3,000 of interest, $5,000 of ordinary dividends of which $4,000 are qualified, and an $8,000 long-term capital gain. Total income and AGI are $111,500. Their standard deduction is $32,200 plus two times $1,650, or $35,500, and because their MAGI is below $150,000 they each get the full $6,000 senior deduction. Taxable income is $111,500 minus $35,500 minus $12,000, which is $64,000.

Of that, $12,000 is qualified dividends and long-term gain, and the joint 0% band reaches $98,900 for 2026, so all of it is taxed at 0%. The other $52,000 is ordinary income: $2,480 at 10% plus $3,264 at 12%, a total tax of $5,744, about 5.2% of their income. The senior deduction alone saves them $1,440 at their 12% rate.

A two-income couple with a side business in 2025

Jordan earns $118,000 and defers $10,000 into a 401(k); Sam has a business with $40,000 of net profit. They file jointly for 2025, have $1,200 of interest, put $4,000 into a family HSA, and Jordan's W-2 shows a $3,500 overtime premium. Their total income is $149,200. Sam's self-employment tax is $40,000 times 92.35% times 15.3%, or $5,651.82, and half of it ($2,826) is an adjustment along with the HSA, so AGI is $142,374.

They paid $13,500 in state and local taxes, $15,200 of mortgage interest and $4,000 to charity, so itemizing ($32,700) beats the $31,500 standard deduction. The overtime premium is fully deductible at their income. Their QBI deduction is 20% of $37,174 ($40,000 minus the deductible half of self-employment tax), or $7,435, well under the income limit. Taxable income is $142,374 minus $32,700 minus $3,500 minus $7,435, which is $98,739, and the 2025 tax is $11,551. Run the same numbers for 2026 and the result flips: the 0.5% floor trims their charitable deduction to $3,288, itemizing falls to $31,988, and the $32,200 standard deduction plus $2,000 of cash gifts ($34,200) wins. Their 2026 taxable income is $97,239 and the tax $11,173.

Taxable income at common salaries

The table shows 2026 taxable income and regular tax for W-2 wages only, with no 401(k) deferrals, the standard deduction and no one aged 65 or older. Each figure was computed with the same formulas as the calculator and rounded to the nearest dollar.

Taxable income is wages minus one standard deduction (never less than zero), while the tax grows faster than income because more of each raise lands in higher brackets. For 2025 the single column reads $14,250 and $1,472 at $30,000 of wages, and $84,250 and $13,449 at $100,000.

How to use the calculator and who it is for

1. Choose the tax year and filing status, and tick the age and blindness boxes that apply. For married filing separately you can also tell the calculator that your spouse itemizes.
2. Enter income. Gross wages before 401(k) deferrals plus the deferrals in their own field, or W-2 box 1 with the deferral field left empty. Add interest, dividends, business profit or loss, capital gains or losses, retirement distributions, the taxable part of Social Security and other income.
3. Enter adjustments: deductible IRA contributions, HSA contributions and student loan interest. Half of self-employment tax is figured for you.
4. Add itemized deductions if you have them. The calculator compares them with the standard deduction and uses the larger one.
5. Add the new deductions for qualified tips, the overtime premium and car loan interest.

The result shows taxable income, the full path from total income through AGI, a side-by-side of the standard and itemized deduction, the tax by bracket and the same figures for the other tax year. It is for employees checking a pay change, retirees planning withdrawals, freelancers estimating quarterly payments with the Self-Employment Tax Calculator, and anyone who wants to understand the numbers on their return before filing.

Key terms

• Gross income: all income the tax law counts, before any adjustments or deductions.
• Total income: the sum of your taxable income sources on Form 1040 line 9.
• Adjustments: deductions taken before AGI, available to every filer.
• Adjusted gross income (AGI): total income minus adjustments; the base for many limits.
• Modified AGI (MAGI): AGI with certain items added back; for the Schedule 1-A deductions it equals AGI for most people.
• Standard deduction: a flat amount by filing status, age and blindness.
• Itemized deductions: specific expenses listed on Schedule A instead of the standard deduction.
• QBI deduction: up to 20% of qualified business income from pass-through businesses.
• Taxable income: AGI minus all deductions; the amount the brackets apply to.
• Marginal rate: the rate on your last dollar of ordinary taxable income.
• Effective rate: total income tax divided by total income.

What changes the result, and tips

Filing status and the tax year move every threshold. Pre-tax deferrals, HSA contributions and business losses lower AGI and therefore taxable income. Itemized deductions matter only once they pass the standard deduction, and the SALT cap and the 2026 charitable floor decide how much of them counts. The new deductions help only people with tips, overtime premiums, a qualifying car loan or a birthday that makes them 65 by December 31, and each one fades out at higher MAGI.

• Do not subtract a 401(k) deferral twice: W-2 box 1 already excludes it.
• If you are close to the standard deduction, grouping two years of charitable gifts into one year can let you itemize in that year and take the standard deduction in the next.
• A raise that pushes MAGI past $150,000 ($300,000 joint) starts to cut the tips and overtime deductions by $100 for each full $1,000.
• Check the result against the Tax Bracket Calculator to see how much room is left in your current bracket.

Limitations

This is an estimate of taxable income and regular income tax before credits. It does not include the child tax credit or other credits, the alternative minimum tax, the Net Investment Income Tax, the Additional Medicare Tax, the phase-out of IRA deductions for workplace plan participants, the AGI percentage limits on charitable gifts, passive and at-risk loss rules, or the wage, property and specified service limits on the QBI deduction above the thresholds. It assumes your qualified business income comes from an active business and that tips come from an occupation on the IRS list. For a joint return it figures self-employment tax as if the self-employed spouse had no W-2 wages. Below $100,000 of taxable income the IRS Tax Table taxes the midpoint of each $50 band, so a filed return can differ from the formula by a few dollars.

Related calculators

• Build AGI from income and adjustments with the AGI Calculator.
• Estimate your full federal tax, including credits, with the Income Tax Calculator.
• See your marginal and average rate with the Tax Bracket Calculator and the Effective Tax Rate Calculator.
• Compare a joint return with two single returns in the Marriage Tax Calculator.
• Work out tax on investment sales with the Capital Gains Tax Calculator.
• Plan retirement savings with the 401(k) Calculator and the HSA Calculator.

Sources

• Internal Revenue Service, Rev. Proc. 2025-32: 2026 brackets, standard deductions, capital gain rate thresholds, QBI thresholds and student loan phase-out; 2025 standard deduction as amended by P.L. 119-21.
• Internal Revenue Service, Rev. Proc. 2024-40: 2025 brackets, additional standard deduction, capital gain thresholds, QBI thresholds, student loan phase-out.
• Internal Revenue Service, Form 1040 (2025) and its instructions: line order, Qualified Dividends and Capital Gain Tax Worksheet, student loan interest worksheet.
• Internal Revenue Service, Schedule 1-A (Form 1040), 2025: tips, overtime, car loan interest and senior deductions.
• Internal Revenue Service, Instructions for Schedule A, 2025: SALT cap worksheet, medical floor, mortgage interest limits.
• Internal Revenue Service, Instructions for Form 8995, 2025: simplified QBI deduction.
• Internal Revenue Service, Publication 505 (2026): 2026 SALT cap, charitable gift rules, limit on itemized deductions, QBI minimum, self-employment tax worksheet.
• Internal Revenue Service, Publication 501: rules for married filing separately, including the capital loss limit.
• Internal Revenue Service, IR-2025-111: 2026 401(k) and IRA limits and IRA deduction phase-outs; Rev. Proc. 2025-19 and Rev. Proc. 2024-25: HSA limits.
• Social Security Administration, Contribution and benefit base: wage base of $176,100 for 2025 and $184,500 for 2026.