Educational use only. This guide is for
general educational purposes and is not financial, tax, legal, or accounting advice. Tax
rules can change and individual facts matter. Verify the information with official
sources and a qualified professional before making tax or financial decisions.
1. Build Federal AGI
Start with total W-2 gross wages. Add any taxable state refund, then subtract pre-tax medical, 401(k), FSA, and HSA contributions to get the federal income base used here. Enter only the taxable portion of a prior-year state income tax refund.
Federal AGI = total gross wages + taxable state refund - pre-tax medical
- pre-tax 401(k) - pre-tax FSA - pre-tax HSA
2. Subtract the Larger Planning Deduction You Choose
| 2026 standard deduction | Amount |
|---|---|
| Single | $16,100 |
| Married filing jointly | $32,200 |
| Married filing separately | $16,100 |
| Head of household | $24,150 |
For itemized deductions, calculate deductible SALT plus deductible mortgage interest.
SALT paid = state income tax paid + state payroll tax paid + property
tax paid
SALT cap = max($10,000, filing-status cap - max(0, Federal AGI - phaseout threshold) × 30%)
Deductible SALT = min(SALT paid, SALT cap)
Deductible mortgage interest = mortgage interest paid × min(1, $750,000 ÷ average mortgage balance)
Itemized deduction = deductible SALT + deductible mortgage interest
SALT cap = max($10,000, filing-status cap - max(0, Federal AGI - phaseout threshold) × 30%)
Deductible SALT = min(SALT paid, SALT cap)
Deductible mortgage interest = mortgage interest paid × min(1, $750,000 ÷ average mortgage balance)
Itemized deduction = deductible SALT + deductible mortgage interest
| Status | 2026 SALT cap | Phaseout begins |
|---|---|---|
| Single | $40,400 | $505,000 |
| Married filing jointly | $40,400 | $505,000 |
| Married filing separately | $20,200 | $252,500 |
| Head of household | $40,400 | $505,000 |
3. Calculate the Child Tax Credit
The 2026 credit starts at $2,200 per eligible child. It phases out by $50 for each whole or partial $1,000 above the threshold.
Maximum credit = eligible children × $2,200
Reduction steps = ceil(max(0, Federal AGI - threshold) ÷ $1,000)
Child Tax Credit = max(0, maximum credit - reduction steps × $50)
Reduction steps = ceil(max(0, Federal AGI - threshold) ÷ $1,000)
Child Tax Credit = max(0, maximum credit - reduction steps × $50)
| Status | Phaseout threshold |
|---|---|
| Single | $200,000 |
| Married filing jointly | $400,000 |
| Married filing separately | $200,000 |
| Head of household | $200,000 |
4. Apply 2026 Federal Brackets
Federal taxable income = max(0, Federal AGI - selected deduction)
Bracket tax = sum of each taxable slice × that slice's marginal rate
Bracket tax = sum of each taxable slice × that slice's marginal rate
| Status | 10% | 12% | 22% | 24% | 32% | 35% | 37% |
|---|---|---|---|---|---|---|---|
| Single | $0-$12,400 | $12,400-$50,400 | $50,400-$105,700 | $105,700-$201,775 | $201,775-$256,225 | $256,225-$640,600 | Over $640,600 |
| Married filing jointly | $0-$24,800 | $24,800-$100,800 | $100,800-$211,400 | $211,400-$403,550 | $403,550-$512,450 | $512,450-$768,700 | Over $768,700 |
| Married filing separately | $0-$12,400 | $12,400-$50,400 | $50,400-$105,700 | $105,700-$201,775 | $201,775-$256,225 | $256,225-$384,350 | Over $384,350 |
| Head of household | $0-$17,700 | $17,700-$67,450 | $67,450-$105,700 | $105,700-$201,750 | $201,750-$256,200 | $256,200-$640,600 | Over $640,600 |
5. Finish the Federal Tax Calculation
Federal income tax = max(0, bracket tax - Child Tax Credit)