Personal Finance & Estate › Income, gift, estate & real-estate taxes › Income tax (federal & California)
Federal tax brackets (10%–37%)
Current rates since 2018· Tax rule
Law or rule (2026)Set by statute, regulation or the agency; numbers change yearly.
Seven federal income-tax rates, 10% to 37%, each applied only to the slice of taxable income that falls in its band.
See it on the Personal Finance & Estate map →How it works
Taxable income is stacked in layers. For a married couple filing jointly in 2026, the first $24,800 is taxed at 10%, income up to $100,800 at 12%, then 22%, 24%, 32% and 35%, with 37% above $768,700 ($640,600 for single filers). The marginal rate is the rate on the next dollar; the effective rate, total tax divided by income, is always lower. Bands rise with inflation yearly. Common myth: moving into a higher bracket raises the rate on all income.
Why it matters for you
Brackets decide what the next dollar of income, a Roth conversion or a property sale really costs, so they drive timing decisions.
Think of it like
Like tiered utility pricing: the higher rate applies only to usage above each tier, never to the whole bill.
Rules, limits and sources (2026)
IRC Sec. 1 sets the rates; the IRS publishes each year's inflation-adjusted bands in a revenue procedure (Rev. Proc. 2025-32 for 2026). The 2017 TCJA set today's rates; the 2025 OBBBA made them permanent.
Watch out for
Bands are indexed to 'chained CPI', which rises a bit slower than regular CPI; any future Congress can still change the rates.
Connections (3)
▸Federal tax brackets (10%–37%) set the rates of Income tax (federal & California)Law or rule (2026)
How they connect
The brackets are the rate schedule of the federal income tax: after deductions, taxable income is sliced into seven bands taxed at 10% to 37%. California runs its own separate ladder, 1% to 13.3%, so a top earner's combined marginal rate can exceed 50%.
When it applies
Congress set the first brackets, 1% to 7%, in 1913; today's seven rates come from the 2017 TCJA and were made permanent in July 2025.
The rule
IRC Sec. 1(j); IRS Rev. Proc. 2025-32 lists the 2026 bands; California's rates are in Revenue and Taxation Code sec. 17041.
Watch out for
Economists debate how much bracket changes affect work and saving; whether future Congresses keep today's rates is open.
▸Roth conversion is best timed using Federal tax brackets (10%–37%)Depends on you
How they connect
A Roth conversion adds the converted amount to ordinary income, so its cost depends on which bracket it lands in. Many convert in low-income years, such as early retirement or a year with large depreciation, filling income up to the top of a chosen bracket. California taxes conversions too, up to 13.3%.
When it applies
Open to all incomes since 2010; the 2017 TCJA ended undoing ('recharacterizing') conversions starting in 2018.
How sure?
IRC Sec. 408A(d)(3); Form 8606 reports conversions; bracket thresholds come from the IRS annual revenue procedure.
Watch out for
Whether converting pays depends on future tax rates, heirs' brackets, Medicare IRMAA surcharges and a possible move out of California.
▸Required minimum distributions (RMDs) can push retirees into higher Federal tax brackets (10%–37%)Watch out
How they connect
RMDs rise each year as the IRS divisor shrinks, from about 3.8% of the balance at 73 to over 8% at 90. Stacked on Social Security, pensions and rental income, they can push retirees into the 24% or 32% bracket, make up to 85% of Social Security taxable, and trigger Medicare IRMAA surcharges.
When it applies
Hits hardest in the 70s and 80s, and after a spouse dies, when the survivor files single with narrower brackets but similar RMDs.
How sure?
IRS Uniform Lifetime Table divisors (26.5 at 73, 12.2 at 90); bracket tables and IRMAA thresholds published yearly.
Watch out for
How much to convert to Roth earlier depends on future tax law; to protect a surviving parent, model both spouses' scenarios with a CPA.