How is US income tax calculated?
The US uses progressive federal brackets from 10% to 37%. You first subtract the standard deduction ($14,600 single, $29,200 married filing jointly for the current year) to get taxable income, then apply the brackets. Most states add their own income tax on top, though states such as Texas, Florida, and Washington have no state income tax.
What is the standard deduction?
The standard deduction is a flat amount you subtract from income before tax is calculated, so you are not taxed on that portion. For the current year it is $14,600 for single filers and $29,200 for married filing jointly. You take the standard deduction unless your itemized deductions are larger.
Does this include Social Security and Medicare?
No. This estimates federal and state income tax only. FICA taxes (Social Security 6.2% and Medicare 1.45%) are withheld separately. If you are self-employed, use the Self-Employment Tax calculator, which covers both halves of FICA.
Why is my effective rate lower than my bracket?
Because brackets are marginal: only the income that falls within each bracket is taxed at that bracket rate. Your top bracket (marginal rate) applies only to your last dollars, so your overall effective rate is lower.