The US tax code, minus the noise.

All figures current as of 26 August 2026. Federal amounts are tax year 2026 unless stated otherwise — those get reported on returns filed in early 2027. Verify against the primary sources before relying on any number for filing.

The structure: three layers, not one

Most people say "taxes" and mean the IRS. That's roughly half the picture. The US taxes on three independent layers, each with its own rules, its own collector, and no obligation to agree with the others:

• Federal — income tax, payroll tax (Social Security + Medicare), corporate tax, estate and gift tax, excise, customs duties.
• State — income tax (41 states), sales tax (45 states + DC), corporate tax (44 states), and a long tail of franchise and gross-receipts taxes.
• Local — property tax mostly, plus city income taxes in places like New York City, Philadelphia, and many Ohio municipalities.

The practical consequence: two people earning identical salaries in Austin and San Francisco pay identical federal tax and wildly different total tax. Any "US tax rate" quoted as a single number is wrong by construction.

Who actually runs the system

The IRS collects the money. It's a bureau of the Treasury Department, and its current structure is unusual: Treasury Secretary Scott Bessent has served as acting Commissioner, while Frank Bisignano — simultaneously Commissioner of the Social Security Administration — was appointed the agency's first-ever Chief Executive Officer in October 2025, a post that doesn't require Senate confirmation. His stated 2026 priorities are a digital-first agency, improved collections, and privacy. The IRS collects roughly 96% of the funding for federal government operations.

The Taxpayer Advocate Service, led by National Taxpayer Advocate Erin M. Collins, is an independent watchdog inside the IRS. If you're stuck in a processing black hole, this is the escalation path most people don't know exists.

Congress writes the law, not the IRS. Tax bills constitutionally originate in the House Ways and Means Committee, move through Senate Finance, and are scored by the nonpartisan Joint Committee on Taxation (JCT). The IRS only interprets and administers — via regulations, revenue procedures, and revenue rulings.

The US Tax Court hears disputes before you pay, which is the key procedural advantage over district court.

The professionals — and why the letters matter

There are about 880,000 people with an active Preparer Tax Identification Number (PTIN) — the license to prepare returns for pay. But that number hides a sharp split in authority:

Credential	Who licenses	Representation rights before IRS
CPA (~201,600 with PTINs)	State boards of accountancy	Unlimited
EA — Enrolled Agent (~66,500)	The IRS directly	Unlimited
Tax attorney (~24,100)	State bars	Unlimited
AFSP participant	Voluntary IRS program	Limited
PTIN-only preparer	Nobody, functionally	Essentially none

That last row is the important one. The majority of paid preparers are subject to no testing or continuing-education requirement at all. The GAO flagged this again in February 2026: the IRS has legal authority to oversee credentialed preparers only, and errors from unqualified preparers drive billions in improper payments. If you're paying someone, the credential is not a formality.

The distinction people most often get wrong: a CPA is a state-licensed accountant who may or may not specialize in tax. An EA is federally licensed specifically in tax, by passing a three-part IRS exam. For a pure tax problem, an EA is often the better and cheaper fit.

The numbers that matter for 2026

Income tax brackets

Seven rates, unchanged: 10, 12, 22, 24, 32, 35, 37%. The One Big Beautiful Bill Act (OBBBA, July 2025) made the TCJA rate structure permanent, so the scheduled snap-back to 39.6% never happened.

Rate	Single	Married filing jointly	Head of household
10%	$0 – $12,400	$0 – $24,800	$0 – $17,700
12%	$12,401 – $50,400	$24,801 – $100,800	$17,701 – $67,450
22%	$50,401 – $105,700	$100,801 – $211,400	$67,451 – $105,700
24%	$105,701 – $201,775	$211,401 – $403,550	$105,701 – $201,775
32%	$201,776 – $256,225	$403,551 – $512,450	$201,776 – $256,200
35%	$256,226 – $640,600	$512,451 – $768,700	$256,201 – $640,600
37%	$640,601+	$768,701+	$640,601+

These are marginal. A Californian earning $150,000 does not pay 13.3% state tax on all of it — the top rate applies only to the slice above the threshold. This is the single most common misreading of a tax table anywhere.

Standard deduction

$16,100 single · $32,200 married filing jointly · $24,150 head of household. Roughly 90% of filers take it rather than itemizing. Age 65+: add $2,050 (single) or $1,650 per qualifying spouse (joint), plus the separate $6,000 OBBBA senior deduction (phases out at 6% above $75,000 / $150,000 MAGI, expires after 2028).

Payroll tax — the one nobody notices

Component	Rate	Cap
Social Security (OASDI)	6.2% employee + 6.2% employer	First $184,500 of wages
Medicare	1.45% + 1.45%	No cap
Additional Medicare	0.9% (employee only)	Wages over $200,000
Self-employment	15.3% combined	Same wage base logic
Net Investment Income Tax	3.8%	MAGI over $200k / $250k joint

For a large share of American households, payroll tax exceeds income tax. It's flat-to-regressive above the wage cap, and it's why "the bottom half pays no taxes" is a misleading statement — they pay very little income tax, but full payroll tax from dollar one.

Investment, business, estate

• Long-term capital gains / qualified dividends: 0% up to $49,450 single / $98,900 joint · 15% above that · 20% above $545,500 / $613,700. Short-term gains are taxed as ordinary income.
• Qualified Business Income (§199A): 20% deduction for pass-throughs, now permanent. Limits phase in above $201,775 / $403,500.
• Corporate rate: flat 21% federal.
• Estate tax exemption: $15 million per person in 2026 (OBBBA made the higher exemption permanent and raised it), indexed going forward. Annual gift exclusion: $19,000 per recipient.
• AMT exemption: $90,100 / $140,200, with phaseout thresholds pulled back to $500,000 / $1,000,000 and an accelerated 50% phaseout rate — a quiet tax increase for some upper-middle earners in 2026.

Credits

• Child Tax Credit: $2,200 per child, $1,700 refundable.
• EITC: up to $8,231 (three or more children), $7,316 (two), $4,427 (one), $664 (none).

Tax-advantaged accounts

401(k)/403(b)/457/TSP $24,500 · catch-up 50+ $8,000 · ages 60–63 $11,250 · IRA $7,500 (+$1,100 catch-up) · HSA $4,400 self-only / $8,750 family · Health FSA $3,400 · SIMPLE $17,000 · SEP $72,000.

New in 2026 under SECURE 2.0: if your prior-year FICA wages from an employer exceeded $150,000, your catch-up contributions must be Roth (after-tax).

Policies taxpayers should actually know about

The four new deductions — and their expiry cliff

OBBBA created four temporary deductions, claimed on the new Schedule 1-A, available whether or not you itemize:

• Tips — up to $25,000
• Overtime premium pay — up to $12,500 ($25,000 joint); only the half-time premium portion qualifies
• Car loan interest — up to $10,000, new US-assembled vehicles only
• Senior deduction — $6,000 per qualifying person 65+

Tips and overtime phase out above $150,000 MAGI ($300,000 joint). Critically: payroll tax still applies to every dollar of tips and overtime. This is an income-tax deduction, not an exemption.

All four expire after tax year 2028. Don't build a five-year plan on a four-year deduction.

SALT: the moving cap

The state and local tax deduction cap is $40,400 for 2026, up from the old $10,000. It phases down by 30% of MAGI above $505,000 and floors at $10,000 — so above roughly $600,000 of income you're back to the old cap. The higher cap runs through 2029, then reverts to $10,000 in 2030.

Charitable giving flips in both directions in 2026

• Non-itemizers get a new $1,000 / $2,000 above-the-line deduction (cash gifts only, no donor-advised funds).
• Itemizers now face a 0.5%-of-AGI floor — donations below that threshold stop being deductible at all.

Direct File is dead

The IRS's free government-run filing tool was discontinued for the 2026 filing season, after two years and about 296,000 returns (under 0.5% of all filings). What remains:

• IRS Free File — private partner software, AGI up to $89,000
• Free File Fillable Forms — any income, no hand-holding
• VITA / TCE — free in-person help for lower-income, elderly, and disabled filers
• MilTax — military

OBBBA §70607 directs Treasury to study a public-private replacement. Nothing has launched.

Deadlines and penalties

The 2026 filing season opened January 26, 2026. Tax year 2026 returns are due April 15, 2027. Quarterly estimated payments run April 15, June 15, September 15, and January 15.

• Failure to file: 5% per month, capped at 25% — ten times worse than the late-payment penalty.
• Failure to pay: 0.5% per month.
• An extension extends filing, not payment. October 15 is a paperwork deadline, not a money deadline.
• Safe harbor: pay 90% of this year's liability or 100% of last year's (110% if prior-year AGI exceeded $150,000) and you avoid underpayment penalties regardless of what you eventually owe.

State taxes: same country, different worlds

Income tax

Nine states levy no individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. (Washington still taxes capital gains above a threshold at 7%; New Hampshire completed the repeal of its interest-and-dividends tax.)

Of the 41 that do tax income, 15 use a single flat rate and 26 plus DC use graduated brackets. Top rates run from about 2% to 13.3% in California.

The direction of travel is clearly downward. Effective January 1, 2026: North Carolina hit its 3.99% flat target, Nebraska cut its top rate from 5.2% to 4.55%, Montana from 5.9% to 5.65%, Indiana to 2.95%, Oklahoma consolidated to three brackets with a 4.5% top rate, South Carolina moved to 1.99%/5.21%, and Ohio converted to a flat tax. Several states (Mississippi, Kentucky, Georgia, Indiana, North Carolina) have legislated phasedowns toward zero contingent on revenue triggers.

Sales tax

Population-weighted national average combined state + local rate: 7.53%. Highest: Louisiana ~10.1%, Tennessee 9.61%, Washington 9.57%, Arkansas 9.48%, Alabama 9.46%. Five states levy no state sales tax: Alaska (locals can), Delaware, Montana, New Hampshire, Oregon. Sales tax accounts for about 24% of combined state and local tax collections.

Property tax

Effective rates on owner-occupied housing range roughly 8x, from about 0.3% in Hawaii to 1.9%+ in New Jersey and Illinois (exact figures vary with methodology and vintage). Property tax is the single largest state-and-local revenue source at roughly $797 billion.

The trade-off nobody accounts for

No-income-tax states fund themselves somehow. Texas pairs zero income tax with property tax near 1.7%. New Hampshire has no income or sales tax and among the highest property taxes in the country. Tennessee has no income tax and near-top sales tax. Compare total burden, not one line item.

Distribution: who actually pays

Where federal money comes from (FY2025, ~$5.2 trillion in receipts)

Source	Share
Individual income tax	~51% ($2.66T)
Payroll / social insurance	~34% ($1.75T)
Corporate income tax	~11%
Customs duties (tariffs)	3.7% ($195B)
Excise, estate, misc.	~2–3%

Tariff collections roughly 2.5x'd year over year after the 2025 trade actions — from about $77B to $195B — and still didn't crack 4% of federal revenue. Worth remembering whenever tariffs get described as a replacement for the income tax. Total FY2025 outlays were ~$7.0 trillion, leaving a $1.8 trillion deficit.

Who pays the income tax (IRS data, tax year 2023 — the latest complete set)

153.1 million returns, $15.2 trillion of AGI, $2.14 trillion of individual income tax collected. Average effective rate: 14.1%.

Group	AGI threshold	Share of AGI	Share of income tax paid	Average rate
Top 1%	$675,602+	20.6%	38.4%	26.3%
Top 5%	$272,209+	36.4%	59.3%	23.0%
Top 10%	$187,608+	47.6%	70.5%	20.9%
Top 50%	$53,801+	87.7%	96.7%	15.6%
Bottom 50%	under $53,801	12.3%	3.3%	3.7%

The top 1% — 1.5 million returns — paid nearly as much income tax as the bottom 95% combined.

Three honest caveats, because this table gets weaponized in both directions:

1. It covers federal income tax only. Payroll tax, which is far flatter, is about a third of federal revenue and hits low earners hardest as a share of income. Most state and local taxes are flatter still.
2. Refundable credit portions (EITC, additional CTC) are classified as spending by OMB, so they're excluded — which overstates the bottom half's tax burden.
3. AGI omits large categories: municipal bond interest, employer health insurance, unrealized gains, imputed rent, unreported income.

The system is genuinely progressive on the income tax. It is meaningfully less so once you count everything.

The tax gap

Gross tax gap for tax year 2022: $696 billion. After late payments and enforcement, net: $606 billion — about 2.3% of GDP. Voluntary compliance rate: 85%.

Where it comes from:

• Underreporting — $539B (77%)
• Underpayment — $94B
• Non-filing — $63B

The pattern behind that split is not mysterious. Wage income, subject to third-party reporting and withholding, has a misreporting rate in the low single digits. Income with no third-party reporting — sole proprietorships, rents, informal cash businesses — is where compliance collapses. Visibility, not enforcement intensity, is what drives compliance.

What to do with all this

1. Check your withholding once a year, in Q3. A large refund isn't a win; it's a 0% loan to the Treasury.
2. File on time even if you can't pay. The failure-to-file penalty is ten times the failure-to-pay penalty.
3. Verify your preparer's credential. The IRS maintains a public directory of credentialed preparers. "PTIN holder" is not a qualification.
4. Treat 2028, 2029, and 2030 as real dates. Tips, overtime, car loan interest, and the senior deduction die after 2028. SALT relief ends after 2029. Multi-year plans built on them need an exit.
5. Model state and local together before relocating. Income, sales, and property tax offset each other by design.
6. If you're self-employed, assume you are in the high-scrutiny bucket. Not because anyone is targeting you — because that's where the underreporting is, and it's where documentation quality decides audit outcomes.

This is general information, not tax advice. Individual situations vary; consult a credentialed professional before acting.