High earners pay more in taxes, as portions of their income are subject to higher tax rates. Many taxpayers claim the standard deduction, which varies depending on filing status, as shown in the table below. Note that the new tax plan has increased the size of the standard deduction to nearly double its 2017 amount. Estimated tax payments are a crucial part of managing your tax obligations if you earn significant income outside of regular wages. By staying on top of due dates, accurately calculating your payments, and using resources like TaxAct, you can avoid penalties and make the process much more manageable.
How Income Taxes Are Calculated
Independent contractors, unlike W-2 employees, will not have any federal tax deducted from their pay. This means that because they are not considered employees, they are responsible for their own federal payroll taxes (also known as self-employment tax). Both employers and employees split the Federal Insurance Contribution Act (FICA) taxes that pay for Social Security and Medicare programs. The FICA rate due every pay period is 15.3% of an employee’s wages. However, this tax payment is divided in half between the employer and the employee. Another policy under consideration is to lower the 90% match for the ACA’s Medicaid expansion population to the state’s traditional Medicaid match.
Download the TaxCaster Tax Calculator App to your Android or iPhone. We save your information — change it anytime and our tax calculator will show you how it affects your federal tax refund. To calculate taxable income, you begin by making certain adjustments from gross income to arrive at adjusted gross income (AGI). Once you have calculated adjusted gross income, you can subtract any deductions for which you qualify (either itemized or standard) to arrive at taxable income. When you file your taxes, you may either get a tax bill or a tax refund.
- If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that isn’t a Saturday, Sunday or holiday.
- When your tax calculator spits out those numbers, it’s applying a complex series of rules, thresholds, and factors specific to your situation.
- For example, if the results from this calculator tell you to pay $1,200 quarterly, have your employer increase your withholding by $200 on your biweekly payroll.
- These expenses include the obvious—tuition and fees—but also extend to room and board, books, supplies, and even transportation.
- For more info on this topic, check out our Guide to Adjusting Your Self-Employed Estimated Tax Payments.
Identify Potential Deductions and Credits
- What about older dependents who don’t qualify for the Child Tax Credit?
- So, if you owe $1,000 but qualify for a $500 tax credit, your tax bill goes down to $500.
- Employment income (W2) refers to any income earned from a traditional job, in which your employer gives you a W2 form at the end of the year.
When you fill out your income tax return you’ll be prompted to give your bank account details. That way, the IRS can put your refund money right in your account, and you won’t have to wait for a check to arrive in the mail. Remember that a tax deduction reduces your taxable income, cutting your tax bill indirectly by reducing the income that’s subject to a marginal tax rate. A tax credit is a dollar-for-dollar discount on your tax bill. So, if you owe $1,000 but qualify for a $500 tax credit, your tax bill goes down to $500. Whether you save it for retirement, use it to pay down credit card debt or spend it immediately, a tax refund can be a great financial boost.
For a single filer earning $50,000 in 2025, the estimated federal tax would be approximately $4,295. This calculation assumes the standard deduction and no additional credits. Actual tax owed may differ based on individual circumstances and deductions.
Option #6: Increasing your W-2 withholding
Our tax return calculator will take all of this into account when figuring out what you can expect at tax time. The amount of tax you pay in the USA depends on your income, filing status, and deductions. State and local taxes may also apply, varying by location. Based on the rates in the table above, a single filer with an income of $50,000 would have a top marginal tax rate of 22%.
The calculations do not infer that the company assumes any fiduciary duties. The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results.
Your marginal tax rate relates to the tax bracket where your last dollar of income falls. Next, you can lower your AGI by either taking the standard deduction or itemizing your deductions. The standard deduction is a set amount for your filing status. Most people are better off taking the standard deduction because it’s more than their total itemized deductions. If the standard deduction is larger than the sum of your itemized deductions (as it is for many taxpayers), you’ll receive the standard deduction. If it turns out that your tax withholding, payments, or any credits you qualify for did not cover your liability, you may need to pay the rest at tax time.
The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. You can also pay your estimated quarterly taxes by making a phone call. You’ll need to set up an account to use this payment method, but I recommend all taxpayers do that at some point anyway. It’s the only way to easily view your tax records and transcripts — useful if you ever fall behind on your taxes and need to file them a few years calculate estimated federal taxes late. Our Tax Income Estimator is more than equipped to handle state.
Estimated tax payments
Your effective tax rate tells the real story—it’s what you’re actually paying overall when you divide your total tax by your total income. This figure is almost always significantly lower than your marginal rate. Taxpayers who are self-employed or in the gig economy are generally required to make estimated tax payments. Likewise, retirees, investors and others frequently need to make these payments because a significant portion of their income is not subject to withholding. To better compare income tax burdens across counties, we used the national median household income.
You don’t need to pay quarterly taxes
Congress would set the cap amount below projected need in order to achieve federal budget savings. Congress could impose a per capita cap on Medicaid spending either for the program as a whole or for particular groups, such as the Medicaid expansion group. Most states that included this policy option in their analyses calculated the impact of an overall per capita cap. Read on for a high-level summary of the state-level impact of some of the policies under consideration, but each of these analyses is worth reading in full too. Use this paragraph section to get your website visitors to know you.
Our tax return calculator will estimate your refund and account for which credits are refundable and which are nonrefundable. Because tax rules change from year to year, your tax refund might change even if your salary and deductions don’t change. In other words, you might get different results for the 2024 tax year than you did for other recent years. If your income changes or you change something about the way you do your taxes, it’s a good idea to take another look at our tax return calculator.
Don’t forget to make estimated tax payments for your state taxes as well (if necessary). Consider integrating a tax calculator seamlessly into your financial routine for effortless estimation of your tax obligations. With resources like TaxAct, you can ensure accurate calculations tailored to your specific income sources, deductions, and financial circumstances. Sarah is an Enrolled Agent with the IRS and a former staff writer at Keeper. In 2022, she was named one of CPA Practice Advisor’s 20 Under 40 Top Influencers in the field of accounting.
Additional taxes include Social Security (6.2%) and Medicare (1.45%). In order to determine sales tax burden, we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income after taxes. This balance is then multiplied by 35% to estimate the sales tax paid.For property taxes, we compared the median property taxes paid in each county.