Federal income tax is the tax the US federal government charges on individuals' earnings, calculated on a progressive scale so higher incomes are taxed at higher rates. It is the main source of federal revenue and is withheld from most workers' pay throughout the year.
The system is progressive, meaning income is taxed in brackets: the first portion of income is taxed at a lower rate and higher portions at higher rates. Employers withhold an estimate from each paycheck, and the annual return reconciles what was withheld against what is actually owed.
| Component | Effect on your tax |
|---|---|
| Income level | Higher income is taxed at higher bracket rates |
| Filing status | Single, married, or head of household changes the brackets |
| Deductions | Reduce taxable income |
| Credits | Reduce the tax owed dollar for dollar |
Annual returns are typically due on April 15 for the previous year's earnings, though extensions can give more time to file.
A deduction lowers your taxable income; a credit lowers the actual tax you owe, dollar for dollar.
Employers estimate and withhold it from each paycheck; it appears as a line on your pay stub.
No. State and local taxes and social contributions may also apply, all of which reduce your net pay.
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