USA tax guide, 2026.

The United States taxes income at three levels at once: federal, state, and in a handful of cities a third municipal layer. For the worker deciding where to live, or the expat weighing a US move, the headline 37 percent top federal rate is rarely the number that matters. What matters is the effective rate after the standard deduction, the FICA payroll tax that funds Social Security and Medicare, and the state rate, which runs from a flat zero in nine states to 13.3 percent in California. This guide works the real numbers at the 100,000 and 250,000 dollar salary bands and lays out what changes for the American abroad.

One structural note that defines the US system. The United States taxes its citizens and green card holders on worldwide income regardless of where they live, one of only two countries on earth to do so. That single fact reshapes the calculus for the American considering a move overseas, and we cover it in the expat section below. For the cross border view, the tax rates by country comparison places the US against 40 other jurisdictions, and the tax calculator tool runs the per applicant number.

Federal income tax is progressive across seven brackets. The 2026 thresholds below reflect the inflation adjusted figures for the single filer; the married filing jointly bands run at double the width. Confirm the final 2026 figures against the IRS revenue procedure before filing, because the thresholds adjust annually.

The rates apply marginally, which is the part most people misread. A single filer earning 120,000 dollars does not pay 24 percent on the whole sum; they pay 10 percent on the first slice, 12 percent on the next, and so on, with only the dollars above 105,700 taxed at 24 percent. The standard deduction shields the first tranche entirely: 16,100 dollars for a single filer in 2026 and 32,200 dollars for a married couple filing jointly, which means a single worker pays no federal income tax on the first 16,100 dollars of gross wages.

Work the effective rate and the headline shrinks. A single filer earning 100,000 dollars, after the 16,100 dollar standard deduction, has 83,900 dollars of taxable income and owes 13,170 dollars in federal income tax, an effective federal income rate near 13.2 percent. A single filer at 250,000 dollars owes 51,300 dollars, an effective federal income rate near 20.5 percent. Both sit far below the bracket the top dollar falls into.

On top of income tax, every wage earner pays FICA, the payroll tax that funds Social Security and Medicare. The Social Security portion is 6.2 percent on wages up to a cap near 184,500 dollars in 2026; the Medicare portion is 1.45 percent on all wages with no cap, plus an additional 0.9 percent Medicare surtax on wages above 200,000 dollars for a single filer. For most workers below the Social Security cap, FICA adds a flat 7.65 percent to the tax bill, which the income tax brackets do not include.

This is why the combined federal burden at 100,000 dollars is closer to 21 percent than to 13 percent: the 13.2 percent income tax plus the 7.65 percent FICA. The self employed worker pays both halves of FICA, 15.3 percent, through the self employment tax, though half of that is deductible. The after tax salary comparison folds FICA into the city level take home figures, and the highest paying cities after tax ranking ranks US and global metros on the net number.

State income tax is the single largest variable a US worker controls by choosing where to live. Nine states levy no tax on wage income: Texas, Florida, Tennessee, Nevada, Washington, Wyoming, South Dakota, Alaska, and New Hampshire. At the other end, California tops out at 13.3 percent, and New York State reaches 10.9 percent before New York City adds its own 3.876 percent on top.

The practical effect is large. A senior engineer earning 250,000 dollars keeps 23,000 to 30,000 dollars more a year living in Austin or Miami than in San Francisco or New York, purely on the state and city tax difference, before any cost of living adjustment. That is why the no tax states have drawn so many high earners, and why the cities with no income tax ranking and the lowest tax cities ranking are among our most read. The Austin vs New York comparison and the New York vs San Francisco comparison work the trade off in full.

The caveat is that a low tax state is not always a low cost state, and the reverse holds too. Washington levies no wage income tax but carries a high sales tax and a steep housing market in Seattle; Texas has no income tax but among the highest property taxes in the country. The highest paying US cities ranking and the cheapest US cities ranking overlay the income against the cost so the net picture is visible.

Pull the three layers together and the spread across US metros is wide. The table below shows the approximate combined effective rate, including federal income tax, FICA, and state plus city tax, for a single filer at the two reference bands.

The 100,000 dollar earner in Los Angeles or Chicago hands over 5 to 6 percentage points more than the same earner in Austin; at 250,000 dollars the gap widens to 8 to 9 points. Over a decade at a senior salary, the state and city tax choice alone can move several hundred thousand dollars. The cost of living calculator and the relocation score tool let you weigh that tax saving against rent, since a no tax metro with a high housing cost can erase the advantage.

Because the United States taxes citizens on worldwide income, moving overseas does not switch off the US filing obligation; it adds a second one. Three mechanisms keep most expats from paying twice. The Foreign Earned Income Exclusion lets a qualifying expat exclude 132,900 dollars of foreign earned income in 2026, provided they meet the physical presence or bona fide residence test. The Foreign Tax Credit offsets US tax dollar for dollar against income tax already paid abroad, which matters most in high tax countries where the foreign rate exceeds the US one. And tax treaties resolve specific conflicts country by country.

Two compliance items catch expats out. The FBAR requires reporting any foreign bank accounts whose combined balance exceeds 10,000 dollars at any point in the year, and the FATCA form 8938 adds a parallel reporting threshold. Neither creates new tax, but the penalties for missing them are severe. For the American weighing a move, the how to move abroad checklist walks the sequence, and a Wise multi currency account simplifies holding salary and paying US obligations across currencies at close to the mid market rate. The best banks for expats guide covers the account side.

One closing caution on 2026 specifically. Federal bracket thresholds and the standard deduction adjust for inflation every year, and tax law can change between editions, so treat the figures here as the working 2026 framework and confirm the final numbers against the IRS before you file or make a relocation decision on them. For the global context, the tax rates by country comparison places the US in the middle of the developed world on effective rate, well above the Gulf zero tax tier and well below the Nordic high tax tier. The United States country page and the North America overview walk the wider picture.