Income Tax Estimator
Your Tax Breakdown
Detailed Breakdown
Your Tax Bracket
Common Mistakes to Avoid
- Don’t confuse tax brackets with effective rate (you don’t pay the top rate on all income)
- Remember this is an estimate – actual tax depends on deductions and credits
- State/provincial taxes vary significantly and affect your final take-home
- Some income types (capital gains, dividends) are taxed differently
How Income Tax Calculation Works
Income tax isn’t a flat percentage. Countries use progressive tax systems where different portions of your income get taxed at different rates. The first chunk gets taxed at a low rate, the next chunk at a higher rate, and so on.
Here’s the basic formula across all four countries:
Effective Tax Rate = (Total Tax ÷ Gross Income) × 100
Take-Home Pay = Gross Income – Total Tax
Let’s say you earn $60,000 in the US (single filer, 2025). You don’t pay 22% on the whole amount. The first $11,600 gets taxed at 10%, then income from $11,601 to $47,150 at 12%, and only the remaining $12,850 at 22%. Your total federal tax would be around $8,315, giving you an effective rate of about 13.9%, not 22%.
Country-Specific Differences
The US adds federal and state taxes (state rates vary wildly). The UK combines income tax with National Insurance. Canada splits between federal and provincial tax. Australia uses federal tax plus a Medicare levy.
Each system has different thresholds, rates, and personal allowances. The UK gives you £12,570 tax-free before anything gets taxed. Australia’s tax-free threshold is AUD $18,200. These matter because they lower your effective tax rate significantly.
Understanding Tax Brackets vs Effective Rate
Why Your Tax Bracket Doesn’t Tell the Whole Story
If you’re in the 24% tax bracket, that doesn’t mean you pay 24% of your income in taxes. It means your last dollar earned gets taxed at 24%. All the dollars before that get taxed at lower rates.
This is why effective tax rate matters more than your bracket. Someone earning $100,000 in the US might be in the 24% bracket but only pay an effective rate of 16% to 18% after accounting for lower rates on earlier income.
2025/2026 Tax Brackets by Country
United States (2025 Tax Year)
Federal tax brackets for single filers:
| Income Range | Tax Rate |
|---|---|
| $0 to $11,600 | 10% |
| $11,601 to $47,150 | 12% |
| $47,151 to $100,525 | 22% |
| $100,526 to $191,950 | 24% |
| $191,951 to $243,725 | 32% |
| $243,726 to $609,350 | 35% |
| Over $609,350 | 37% |
Add state tax on top. California goes up to 13.3%, Texas has zero. This calculator uses an average 5% state rate for US calculations as a baseline estimate.
United Kingdom (2025/2026 Tax Year)
Personal allowance: £12,570 (tax-free). Then:
| Income Range | Tax Rate |
|---|---|
| £12,571 to £50,270 | 20% |
| £50,271 to £125,140 | 40% |
| Over £125,140 | 45% |
National Insurance adds another 8% to 12% depending on income, calculated separately but functionally another tax.
Canada (2025 Tax Year)
Federal brackets:
| Income Range (CAD) | Tax Rate |
|---|---|
| $0 to $55,867 | 15% |
| $55,868 to $111,733 | 20.5% |
| $111,734 to $173,205 | 26% |
| $173,206 to $246,752 | 29% |
| Over $246,752 | 33% |
Provincial tax varies. Ontario adds 5.05% to 13.16%. Quebec takes 15% to 25.75%. This calculator uses Ontario rates as the default.
Australia (2025/2026 Tax Year)
| Income Range (AUD) | Tax Rate |
|---|---|
| $0 to $18,200 | 0% |
| $18,201 to $45,000 | 16% |
| $45,001 to $135,000 | 30% |
| $135,001 to $190,000 | 37% |
| Over $190,000 | 45% |
Medicare levy adds 2% for most earners. Total effective rates in Australia tend to be lower than the UK but higher than the US for middle incomes.
Edge Cases and Common Questions
What If I Have Multiple Income Sources?
Add them all together first, then calculate tax on the total. If you make $50,000 from a job and $20,000 from freelancing, your taxable income is $70,000. The tax system doesn’t care where the money came from for standard income tax purposes.
But watch out for different tax treatments. Capital gains, dividends, and rental income sometimes get taxed differently. This calculator assumes standard employment income.
Do Deductions Change My Tax Bracket?
Yes. If you earn $60,000 but claim $10,000 in deductions (mortgage interest, charitable giving, retirement contributions), your taxable income drops to $50,000. You get taxed on the lower amount, which can push you into a lower bracket entirely.
In the US, standard deduction for 2025 is $14,600 for single filers. Most people take that instead of itemizing unless they have major expenses like a mortgage.
How Does Overtime Affect My Tax?
Overtime gets taxed the same as regular income. There’s no special overtime tax rate. If you’re in the 22% bracket and earn $5,000 in overtime, that $5,000 gets taxed at 22% (or whatever bracket it falls into).
Some people think overtime gets taxed more because their paycheck withholding looks higher. That’s just your employer withholding at a higher rate to account for the bigger paycheck. You’ll get it back at tax time if too much was withheld.
What’s the Difference Between Marginal and Effective Tax Rate?
Marginal rate is what you pay on your next dollar earned. If you’re in the 24% bracket, earning another $1,000 costs you $240 in tax.
Effective rate is your average tax across all income. Earn $80,000, pay $12,000 in tax, your effective rate is 15%. This is what actually matters for budgeting because it shows what percentage of your total income goes to taxes.
Real-World Examples
Single Earner in the US
Sarah makes $75,000 in Colorado. Federal tax brackets put her around $10,500 in federal tax (effective rate about 14%). Colorado adds 4.4% state tax, roughly $3,300. Total tax around $13,800. She takes home $61,200, or about $5,100 per month.
If she got a $10,000 raise to $85,000, her federal tax goes up by about $2,400 (new income taxed at 22%), state by $440. She keeps $7,160 of that $10,000 raise. Not the full amount, but still a meaningful increase.
UK Employee
James earns £45,000 in London. After the £12,570 personal allowance, he pays 20% on £32,430, which is £6,486 in income tax. National Insurance adds about £3,500. Total deductions around £10,000. He takes home roughly £35,000, or £2,917 per month.
The UK tax burden hits middle earners harder than the US on similar incomes, but you get NHS coverage and other benefits built in.
Canadian Worker
Marie makes CAD $80,000 in Ontario. Federal tax is about $11,800 (15% on first $55,867, then 20.5% on the rest). Ontario adds roughly $4,200. Total tax around $16,000. She keeps $64,000, about $5,333 monthly.
Canada sits between the US and UK in tax burden for most income levels, with more generous social programs than the US but lower taxes than the UK.
Australian Taxpayer
David earns AUD $90,000 in Sydney. Tax on that is about $20,800 (16% on $18,201 to $45,000, then 30% on $45,001 to $90,000). Medicare levy adds $1,800. Total tax $22,600. Take-home $67,400, roughly $5,617 per month.
Australia’s tax-free threshold helps lower earners, but rates climb quickly for anyone above average income.
Quick Reference Table
| Gross Income | Country | Estimated Tax | Take-Home |
|---|---|---|---|
| $50,000 | US (Single) | $8,750 | $41,250 |
| £50,000 | UK | £11,200 | £38,800 |
| CAD $50,000 | Canada | CAD $9,500 | CAD $40,500 |
| AUD $50,000 | Australia | AUD $7,700 | AUD $42,300 |
| $100,000 | US (Single) | $22,000 | $78,000 |
| £100,000 | UK | £30,800 | £69,200 |
| CAD $100,000 | Canada | CAD $24,600 | CAD $75,400 |
| AUD $100,000 | Australia | AUD $24,500 | AUD $75,500 |
Frequently Asked Questions
Is this calculator accurate for my exact situation?
It gives you a solid baseline estimate using current tax brackets. Your actual tax will vary based on deductions, credits, dependents, retirement contributions, and other factors. Think of this as your starting point before personalization.
Why does my paycheck withholding not match this estimate?
Employers withhold based on what you put on your W-4 or equivalent form. If you claimed extra allowances or have irregular income, withholding might not match your actual annual tax. This calculator shows what you’ll owe at year end, not what gets taken from each paycheck.
Should I use gross or net income for financial planning?
Always start with net (take-home). Budgets based on gross income fail because you never see that money. If you take home $4,500 per month, that’s your real budget, not the $6,000 gross you technically earn.
How much should I set aside for taxes as a freelancer?
Use this calculator on your expected annual income, then divide by 12. Set aside that amount monthly. Add another 7.65% (US) for self-employment tax that employees don’t pay directly. So if your effective rate is 18%, save 25% to 26% total as a freelancer.
Do bonuses get taxed differently?
No, but they get withheld differently. Your employer might withhold at a flat 22% (US) on bonus checks, but at tax time, it all gets lumped with regular income. If your actual rate is 15%, you’ll get the overpayment back as a refund.
When to Use This Estimator
Run this calculator when you’re negotiating salary, comparing jobs in different states or countries, planning a major purchase, deciding how much house you can afford, or setting up your monthly budget.
It’s also useful for checking if your paycheck withholding is on track. If this estimate shows you owe $15,000 but your year-to-date withholding is only $10,000 by October, you need to adjust your W-4 or face a surprise tax bill.
Bottom line: this tool shows you what percentage of your income disappears to taxes so you can plan around what actually hits your bank account, not the inflated gross number on your offer letter.