2026 tax year · updated
55 US tax terms you meet on a paycheck, a tax form or in our calculators, each explained in a sentence or two with this year's figures and a link to the official source.
Deductions
A deduction subtracted from gross income to reach adjusted gross income (an adjustment to income on Schedule 1), so you get it whether or not you itemize. Examples: deductible IRA and HSA contributions, student loan interest, the deductible part of self-employment tax.
See also: Adjusted gross income
Payroll and self-employment
An extra 0.9% Medicare tax on wages and self-employment income above $200,000 ($250,000 married filing jointly).
See also: FICA
Income
Your gross income minus the adjustments listed on Schedule 1 of Form 1040, such as deductible IRA and HSA contributions, student loan interest and the deductible part of self-employment tax. It is on line 11 of Form 1040.
Full explanationIncome tax calculatorSource
See also: Modified adjusted gross income, Taxable income, Above-the-line deduction
Investing and retirement
The profit from selling an asset such as stock, crypto or property for more than you paid. Gains on assets held more than a year are long-term and taxed at 0%, 15% or 20%; short-term gains are taxed like wages.
Capital gains tax calculatorGuide: Long-term capital gains tax rates for 2026: 0%, 15%, 20% bracketsSource
See also: Qualified dividends, Wash sale, Net investment income tax
Credits
A credit of up to $2,200 for each qualifying child in 2026, of which up to $1,700 can be refunded. It shrinks above $200,000 of modified AGI ($400,000 married filing jointly).
Guide: Child tax credit 2026: amount, refundable part and income limitsSource
See also: Refundable tax credit, Dependent
Filing
A qualifying child or qualifying relative you can claim on your return, which can bring credits such as the child tax credit. A qualifying relative generally can't have gross income of $5,200 or more (2025).
See also: Head of household, Child tax credit, Unearned income
Income
Pay for work you actually do: salaries, wages, tips, professional fees and other amounts received for services. Interest, dividends, pensions and Social Security are not earned income.
See also: Unearned income, Earned income credit
Credits
A refundable credit for workers with low to moderate earned income; the amount depends on income, filing status and the number of qualifying children. You must file a return to get it, even if you aren't otherwise required to file.
See also: Earned income, Refundable tax credit
Rates and brackets
Your total tax divided by your income: the average rate you actually pay, usually well below your marginal rate because lower brackets tax the first dollars at lower rates.
Guide: Marginal vs effective tax rate: what you really pay in 2026Source
See also: Marginal tax rate
Filing
Tax you pay during the year, in quarterly installments with Form 1040-ES, on income that has no withholding, such as self-employment, interest or rental income.
Estimated tax calculatorGuide: Quarterly estimated tax payments 2026: due dates and how much to paySource
See also: Withholding, Self-employment tax
Payroll and self-employment
Social Security and Medicare taxes on wages: 6.2% for Social Security (up to the wage base) and 1.45% for Medicare, withheld from your pay and matched by your employer.
Guide: FICA tax in 2026: Social Security and Medicare rates, and who pays whatSource
See also: Social Security wage base, Additional Medicare tax, Self-employment tax
Filing
The income at which you must file a federal return. For 2025 it is $15,750 of gross income for a single filer under 65 and $31,500 for a married couple filing jointly; $400 of net self-employment earnings always requires a return.
Do I need to file taxes?Source
See also: Gross income, Dependent
Filing
The category you file under, which sets your standard deduction and tax brackets: single, married filing jointly, married filing separately, head of household or qualifying surviving spouse. It depends mainly on whether you are married on the last day of the year.
See also: Head of household, Married filing jointly, Married filing separately, Qualifying surviving spouse
Forms
The US individual income tax return, where you report the year's income, deductions and credits and figure your tax, refund or balance due.
See also: Adjusted gross income, Taxable income
Forms
A form from payment apps and online marketplaces reporting payments you received for goods or services. They must send one when your payments are over $20,000 and number more than 200, but the income is taxable whether or not you get a form.
See also: Form 1099-NEC
Forms
The form a business uses to report what it paid you for work as an independent contractor (nonemployee compensation). No tax is withheld, so you pay income tax and self-employment tax yourself.
See also: W-2 vs. 1099, Self-employment tax
Forms
The form your employer gives you showing your wages for the year and the federal, state, Social Security and Medicare taxes withheld from them.
See also: W-2 vs. 1099, Withholding
Forms
The form you give your employer to tell it how much federal income tax to withhold from your pay.
See also: Withholding
Income
All the income you receive as money, goods, property and services that isn't exempt from tax, before any deduction: wages, business receipts, interest, dividends, gains, retirement income and more. It decides whether you must file a return.
Do I need to file taxes?Source
See also: Adjusted gross income, Filing requirement, Gross vs. net income
Comparisons
Gross income is what you earn before anything is taken out; net income is what is left after taxes and deductions. A $60,000 salary in Texas leaves about $50,390 of take-home pay in 2026.
Full explanationTake-home pay calculatorSource
See also: Gross income, Net income, Adjusted gross income
Filing
A filing status for unmarried people who pay more than half the cost of keeping up a home for a qualifying person, such as a child who lives with them for more than half the year. It has a larger standard deduction and wider tax brackets than single.
See also: Filing status, Dependent, Standard deduction
Deductions
Specific expenses you can deduct on Schedule A instead of taking the standard deduction: state and local taxes (up to $40,400 in 2026), home mortgage interest, gifts to charity and medical expenses above 7.5% of AGI, among others. You itemize only when they add up to more than your standard deduction.
See also: Standard vs. itemized deductions, SALT deduction, Standard deduction
Rates and brackets
The rate on your next dollar of taxable income: the rate of the highest bracket your income reaches.
Guide: Marginal vs effective tax rate: what you really pay in 2026Source
See also: Effective tax rate, Tax bracket
Filing
One return for a married couple, combining both spouses' income and deductions. It often gives a lower tax than filing separately, and both spouses are responsible for the tax on it.
See also: Filing status, Married filing separately
Filing
Each spouse files a return with their own income and deductions. The tax is usually higher than on a joint return and some credits are limited or not allowed, but each spouse is responsible only for their own return.
See also: Filing status, Married filing jointly
Income
Adjusted gross income with certain items added back, such as excluded foreign income or tax-exempt interest. There is no single MAGI: each rule that uses it (the premium tax credit, IRA deduction limits, the net investment income tax) says what to add.
See also: Adjusted gross income, Net investment income tax
Income
What is left after taxes and deductions. For a paycheck it is take-home pay (gross pay minus taxes and withholdings); for a business it is profit after expenses.
Take-home pay calculatorSource
See also: Gross vs. net income, Gross income
Investing and retirement
A 3.8% tax on investment income such as interest, dividends, gains and rents, for people whose modified AGI is over $200,000 ($250,000 married filing jointly).
Guide: Net investment income tax (NIIT): who pays the 3.8% in 2026Source
See also: Modified adjusted gross income, Capital gain
Rates and brackets
A tax whose rate rises with income, like the federal income tax: each bracket's rate applies only to the income within it.
See also: Tax bracket
State and local
A tax on the value of real estate, set by counties, cities and school districts. The median US homeowner pays $3,211 a year, an effective rate of 0.89% of home value.
See also: SALT deduction
Deductions
A deduction of up to 20% of qualified business income from a sole proprietorship, partnership or S corporation, taken whether or not you itemize. Extra limits apply once taxable income passes $201,750 ($403,500 joint) in 2026.
See also: Taxable income, Self-employment tax
Investing and retirement
Dividends taxed at the lower long-term capital gains rates instead of ordinary rates, reported in box 1b of Form 1099-DIV. You must have held the stock for more than 60 days in the 121-day period around the ex-dividend date.
Capital gains and dividend tax calculatorSource
See also: Capital gain
Filing
A filing status for the two years after the year your spouse died, if you have a dependent child living with you and meet the other tests. It uses the married filing jointly brackets and standard deduction.
See also: Filing status
Credits
A credit paid to you even when it is larger than your tax, as part of your refund. A nonrefundable credit can only bring your tax down to zero.
See also: Tax credit, Earned income credit, Child tax credit
Investing and retirement
The amount you must withdraw each year from a traditional IRA starting with the year you turn 73, figured from your December 31 balance and an IRS life expectancy table.
See also: Roth conversion
Investing and retirement
Moving money from a traditional IRA to a Roth IRA. The amount converted is taxed as income in the year you convert; qualified withdrawals from the Roth later are tax-free.
Roth conversion calculatorSource
See also: Required minimum distribution, Tax bracket
State and local
A tax on retail purchases charged by states and local governments and added at the register. 5 states have no statewide sales tax. If you itemize, you can deduct sales tax instead of state income tax.
See also: SALT deduction
Deductions
The itemized deduction for state and local taxes: state income tax (or sales tax) plus property taxes. For 2026 it is capped at $40,400 ($20,200 married filing separately), reduced by 30% of modified AGI over $505,000 but not below $10,000.
See also: Itemized deductions, Property tax
Payroll and self-employment
Social Security and Medicare tax for people who work for themselves: 15.3% on 92.35% of net profit, with the Social Security part stopping at the wage base. Half of it is deductible.
Self-employment tax calculatorSource
See also: FICA, W-2 vs. 1099, Estimated tax
Deductions
An extra deduction of up to $6,000 for each person 65 or older, for tax years 2025 to 2028, on top of the standard or itemized deductions. It shrinks by 6% of modified AGI over $75,000 ($150,000 joint).
See also: Standard deduction, Modified adjusted gross income
Payroll and self-employment
The most earnings subject to Social Security tax in a year: $184,500 in 2026. Medicare tax has no cap.
Guide: Social Security tax cap 2026: wage base and maximum taxSource
See also: FICA
Deductions
A fixed amount that reduces your taxable income when you don't itemize: $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household in 2026, more if you are 65 or older or blind.
Full explanation2026 federal tax bracketsSource
See also: Itemized deductions, Standard vs. itemized deductions, Taxable income, Senior deduction
Comparisons
You deduct whichever is larger: the standard deduction ($16,100 single, $32,200 married filing jointly in 2026) or the total of your itemized deductions on Schedule A.
See also: Standard deduction, Itemized deductions, SALT deduction
State and local
Income tax charged by a state on top of federal tax, with its own brackets and deductions. 9 states have no tax on wage income.
State income tax mapGuide: States with no income tax in 2026Source
See also: SALT deduction
Filing
The day-count test that makes a non-citizen without a green card a US resident for tax purposes: at least 31 days in the US this year and 183 days over three years, counting all of this year's days, a third of last year's and a sixth of the year before.
Substantial presence test calculatorSource
See also: Filing requirement
Rates and brackets
A range of taxable income taxed at one rate. In 2026 federal income tax has 7 brackets, from 10% to 37%, and each rate applies only to the income inside its bracket.
See also: Marginal tax rate, Taxable income, Progressive tax
Credits
An amount subtracted directly from your tax, dollar for dollar. A $1,000 credit cuts your tax by $1,000, while a $1,000 deduction only lowers the income that is taxed.
See also: Tax credit vs. tax deduction, Refundable tax credit
Comparisons
A deduction lowers the income that is taxed, so it saves your tax rate times the amount; a credit lowers the tax itself, dollar for dollar. At a 22% rate, a $1,000 deduction saves $220 and a $1,000 credit saves $1,000.
See also: Tax credit, Refundable tax credit, Standard deduction
Filing
An automatic 6-month extension of the time to file, requested on Form 4868 by the filing deadline. It doesn't extend the time to pay: tax owed is still due by the original deadline.
See also: Estimated tax
Filing
Money the IRS pays back when what you paid during the year (withholding, estimated payments) plus refundable credits is more than the tax you owe. You get it only by filing a return.
See also: Withholding, Refundable tax credit
Income
The income your tax brackets apply to: adjusted gross income minus the standard deduction (or your itemized deductions) and other deductions such as the qualified business income deduction.
Full explanationTax bracket calculatorSource
See also: Adjusted gross income, Standard deduction, Tax bracket
Income
Income you don't work for: interest, dividends, capital gains, unemployment compensation, taxable Social Security, pensions and annuities. A dependent with more than $1,350 of it in 2025 must file a return.
See also: Earned income, Dependent
Comparisons
A W-2 reports wages from an employer, who withholds tax and pays half of Social Security and Medicare. A 1099-NEC reports pay to an independent contractor, who pays the full 15.3% self-employment tax and makes estimated payments.
Full explanation1099 tax calculatorSource
See also: Form W-2, Form 1099-NEC, Self-employment tax
Investing and retirement
Selling a stock or security at a loss and buying the same or a substantially identical one within 30 days before or after the sale. The loss can't be deducted then; it is added to the cost of the new shares.
Guide: Tax-loss harvesting: how it works and what it savesSource
See also: Capital gain
Filing
Income tax your employer takes out of each paycheck and sends to the IRS, based on your Form W-4. It is a prepayment: your actual tax is figured on your return, and the difference becomes a refund or a balance due.
See also: Form W-4, Tax refund
Definitions are simplified for everyday use; the linked official pages give the full rules. Figures are for the current tax year unless another year is shown. See our methodology and editorial policy.
TaxWren