Tax bracket calculator

Founders, here’s how to calculate your effective tax rate

According to our latest report, founder salaries dropped 46% year over year. Money is growing tight and they’re using savings to fund the business. In this environment, every dollar counts, and you’ll want to know your exact take-home. Taxes will probably reduce it more than you expect.

Your exact tax rate depends on a number of factors and this calculator provides just a straightforward estimate. But it cannot consider everything—just your total taxable income, and whether you file singularly or jointly. It can’t take into account the nature of that income. If you have multiple income streams such as 1099 income from consulting or speaking, and long-term gains selling stocks, the actual number will vary. Similarly, if part of your taxable income is a bonus or sales commission, that’s subject to a higher tax rate. This calculator also doesn’t consider any deductions you might qualify for. In that way, it’s something of a worst-case scenario calculation. Whatever you pay, it’s likely to be less than what the calculator tells you. 

How the tax bracket calculator works: This calculator uses your total taxable income to tell you what tax bracket you likely fall into. The U.S. tax system is pretty complex and the tax brackets are graduated. Meaning, your first $12,400 of income is taxed at 10%, your next $12,400 is taxed at 12%, and so on, like a set of stairs. 

This means that while your “marginal” tax rate is 24%, you aren’t paying 24% on all the money you earn. Instead, you have a:

• Marginal tax rate: The maximum tax bracket you are subject to, such as 24%.
• Effective tax rate: The actual percentage you pay in taxes, such as 18.7%, when you calculate those brackets.

Let’s use an example. If you are married filing jointly and make $150,000 as a household, your marginal tax rate is 24%. But only the top $44,299 of your income gets taxed at that 24% rate. If you average out that tax you pay over those lesser brackets, your effective tax rate is 15.2%.Tax bracket calculator