Definition
Federal income tax is the tax levied by the federal government on your taxable income. It's progressive — meaning different portions of your income are taxed at different rates as they fall into successive tax brackets. In 2026, rates range from 10% on the lowest income to 37% on income above $640,600 (single).
The tax is calculated on your taxable income (gross income minus deductions), not your gross wages. Most employees' top bracket is 12% or 22%, but because lower slices of income are taxed at lower rates and deductions apply first, the share of gross wages actually paid is usually well below that.
Federal income tax is what your W-4 controls. FICA taxes (Social Security and Medicare) are separate and not affected by W-4 instructions.
How this affects your W-4
Your W-4 instructions tell your employer how much federal income tax to withhold each paycheck. The calculator uses IRS Publication 15-T tables to calculate the correct withholding based on your inputs.
The 2026 OBBBA deductions (tips, overtime, senior bonus, auto loan interest) reduce only federal income tax withholding — not FICA taxes.
See how federal income tax affects your withholding
Use the free W-4 calculator to calculate your exact withholding with your specific situation.
Open the W-4 Calculator →Read the guide
How to Fill Out a W-4 Form in 2026: Complete Step-by-Step Guide
Complete walkthrough of all five W-4 steps for 2026 — from filing status to extra withholding, the new OBBBA deductions, common mistakes and when to update.
Tax Refund vs. Adjusting Your W-4: How to Keep More Money Every Paycheck
The average refund is $3,100 — that's money that was yours all year. Here's how to decide whether a big refund is working for you or against you.
Related terms
Tax Bracket
An income range taxed at a specific rate — income in each bracket is only taxed at that bracket's rate.
Marginal Tax Rate
The tax rate that applies to the last (highest) dollar of your income — your 'tax bracket.'
Withholding
Taxes your employer takes out of each paycheck and sends to the IRS and your state before you receive your pay.