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Worked example

Federal Income Tax Example: Wages, Dividends, and a Long-Term Gain

Maya, a fictional single employee and investor, has wages, bank interest, dividends, and gains in 2026. She wants one broad federal income-tax estimate before reviewing withholding. This is an illustrative 2026 scenario, not personal tax advice.

9 minute read · 2026 U.S. federal tax

Follow the numbers

Subtract adjustments and deductions

Income flowing through adjustments and deductions before splitting into ordinary and preferential tax paths and reaching estimated federal tax.
  1. 1Assemble income
  2. 2Subtract adjustments and deductions
  3. 3Apply two rate stacks and credits
Subtract adjustments and deductions is the editorial focus of this worked example.
Visual summary: Income flowing through adjustments and deductions before splitting into ordinary and preferential tax paths and reaching estimated federal tax. This page highlights: Subtract adjustments and deductions.

The planning question behind the numbers

Maya, a fictional single employee and investor, has wages, bank interest, dividends, and gains in 2026.

She wants one broad federal income-tax estimate before reviewing withholding. The filing-status context is Single, and every tax value uses the 2026 production calculation.

Scenario profile

She wants one broad federal income-tax estimate before reviewing withholding.

Maya, a fictional single employee and investor, has wages, bank interest, dividends, and gains in 2026.

Single

Prepared inputs, grouped by role

Income sources

  • $78,000 wages
  • $600 taxable interest
  • $2,400 ordinary dividends, of which $1,800 is qualified
  • $1,200 net short-term gain and $12,000 net long-term gain
  • $2,500 other ordinary income

Reductions

  • $3,000 pre-tax adjustments
  • standard deduction, $1,000 other deductions, and $800 nonrefundable credits
A fictional planning profile keeps the calculation concrete without implying personal advice.
Visual summary: Maya, a fictional single employee and investor, has wages, bank interest, dividends, and gains in 2026. Filing-status context: Single. Inputs: $78,000 wages; $600 taxable interest; $2,400 ordinary dividends, of which $1,800 is qualified; $1,200 net short-term gain and $12,000 net long-term gain; $2,500 other ordinary income; $3,000 pre-tax adjustments; standard deduction, $1,000 other deductions, and $800 nonrefundable credits.

Inputs the fictional taxpayer has prepared

The scenario uses the same inputs accepted by the calculator. No deduction, credit, basis amount, or eligibility conclusion is created inside the example.

  • $78,000 wages
  • $600 taxable interest
  • $2,400 ordinary dividends, of which $1,800 is qualified
  • $1,200 net short-term gain and $12,000 net long-term gain
  • $2,500 other ordinary income
  • $3,000 pre-tax adjustments
  • standard deduction, $1,000 other deductions, and $800 nonrefundable credits

Follow the calculation from input to result

TaxArith passes the fixture through calculateFederalIncomeTaxEstimate. The values below use the site’s production formatting.

Production calculation journey

Values are generated by calculateFederalIncomeTaxEstimate.

calculateFederalIncomeTaxEstimate

  1. 1. Gross income$96,700.00
  2. 2. Adjusted gross income$93,700.00
  3. 3. Taxable income$76,600.00
  4. 4. Ordinary income tax$8,528.00
  5. 5. Preferential income tax$2,070.00
  6. 6. Credits used$800.00
  7. 7. Estimated federal income tax$9,798.00
The long-term gain and qualified dividends share the preferential stack; they are not simply multiplied by Maya’s ordinary marginal rate.
Visual summary: Gross income: 96700; Adjusted gross income: 93700; Taxable income: 76600; Ordinary income tax: 8528; Preferential income tax: 2070; Credits used: 800; Estimated federal income tax: 9798

The long-term gain and qualified dividends share the preferential stack; they are not simply multiplied by Maya’s ordinary marginal rate.

Change one input and watch the consequence

If the net long-term gain is $22,000 instead of $12,000:

Base case versus one changed input

If the net long-term gain is $22,000 instead of $12,000

Base case

Estimated federal income tax

$9,798.00

One-input change

Alternative estimated tax

$11,298.00
Numeric change+$1,500.00

If the net long-term gain is $22,000 instead of $12,000

The tax change depends on remaining room in the preferential-rate stack, not just on the gain’s size.
Visual summary: Estimated federal income tax: 9798. Alternative estimated tax: 11298.

The tax change depends on remaining room in the preferential-rate stack, not just on the gain’s size.

Before you use the estimate

  • Recreate the example only with records that support your own inputs.
  • Keep the same filing status and tax year when comparing the published numbers.
  • Change one material input at a time and read the full breakdown.
  • Review the stated limitations before using the estimate.

Where this estimate stops

  • The model does not calculate AMT, NIIT, self-employment tax, credit eligibility, state tax, or a filed return.
  • The fictional facts illustrate production logic and do not establish eligibility, filing treatment, or a recommended action for any reader.

Sources and references

Only the primary federal sources used for the rules discussed in this guide are listed here.

  • Revenue Procedure 2025-32

    Internal Revenue Service · The inflation-adjusted 2026 ordinary brackets, standard deductions, preferential-rate thresholds, and other indexed amounts used by the applicable calculation.

  • Topic No. 409, Capital Gains and Losses

    Internal Revenue Service · General capital gain and loss character, netting, the annual capital-loss deduction, and carryover treatment.

TaxArith provides illustrative 2026 U.S. federal tax estimates for general information. It is not tax, legal, financial, or investment advice and does not prepare or file a return. Results depend on the accuracy and completeness of the submitted facts.