Paycheck Tax Calculator

Your paycheck represents your earned wages minus various federal, state, and local taxes plus other deductions. Understanding this journey from gross pay to net pay empowers you to verify accuracy, plan your budget realistically, and make informed decisions about W-4 withholding, benefits elections, and financial planning. The difference between gross and net pay often surprises people, with 20-35% or more disappearing to taxes and deductions before money reaches your bank account. This guide breaks down every component affecting your paycheck so you know exactly where your money goes.

FICA Taxes: Social Security and Medicare

FICA taxes appear on every paycheck, funding Social Security and Medicare with mandatory contributions from all employees.

Social Security tax is 6.2% of gross pay up to the annual wage base ($168,600 for 2024). Once year-to-date earnings exceed this threshold, Social Security withholding stops for the remainder of the year. On a $2,885 paycheck, Social Security tax is $178.87 ($2,885 × 0.062).

High earners see Social Security tax disappear from paychecks later in the year after exceeding the wage base. Someone earning $200,000 annually exceeds the $168,600 threshold around late September or early October, then stops paying Social Security tax on remaining paychecks. This creates noticeably higher take-home pay on year-end paychecks.

Medicare tax is 1.45% of all gross pay with no wage cap. On that $2,885 paycheck, Medicare tax is $41.83 ($2,885 × 0.0145). Unlike Social Security, Medicare tax continues on every paycheck regardless of annual earnings.

Additional Medicare Tax of 0.9% applies to wages exceeding $200,000 (single) or $250,000 (married filing jointly). Employers withhold this additional tax once year-to-date wages cross $200,000, regardless of filing status or spouse's income. High-earning married couples filing jointly may owe additional Medicare tax at filing if combined incomes exceed $250,000 but neither individually exceeds $200,000.

Total FICA withholding is 7.65% (6.2% + 1.45%) on a $2,885 paycheck equals $220.70. Employers pay matching amounts, doubling the total contribution to Social Security and Medicare but only the employee portion appears on your pay stub.

Decoding Your Pay Stub

Pay stubs contain crucial information beyond just your net pay amount. Understanding each section helps verify accuracy and track year-to-date figures.

Earnings section shows gross pay for the period plus year-to-date totals. Verify that gross pay matches your salary calculation or hourly rate times hours worked. For salaried employees, this should be consistent. For hourly employees, compare hours shown to your timesheets.

Tax withholdings list federal, state, and local taxes deducted. Check that these align with expectations based on your W-4 and earnings. Year-to-date figures should track reasonably toward projected annual liabilities. Mid-year federal withholding should approximate half your estimated annual tax.

Deductions section itemizes benefits and other deductions. Review health insurance, retirement contributions, and other deductions for accuracy. Ensure elected contribution amounts match what's being deducted. Year-to-date figures help track annual limits like the $23,000 401(k) deferral limit.

Employer contributions sometimes appear showing employer-paid benefits like retirement matching, health insurance contributions, or life insurance. These don't affect net pay but represent total compensation beyond salary.

Net pay is the final amount deposited into your account or issued as a check. This should match bank deposits precisely. Discrepancies require immediate investigation with payroll.

Year-to-date totals across all categories help with tax planning and benefits tracking. As year-end approaches, review whether you'll hit contribution limits, whether withholding is adequate, and whether you're maximizing employer matches.

Common pay stub errors include incorrect tax filing status, wrong deduction amounts, missing employer matching contributions, or incorrect hours for hourly employees. Review every pay stub, particularly the first few from a new employer or after changes to benefits or W-4 elections.

From Gross Pay to Take-Home Pay

Gross pay is your total earnings before any deductions—the number in your offer letter or employment contract. An employee earning $75,000 annually receives $2,884.62 gross pay per biweekly paycheck if paid 26 times yearly ($75,000 / 26).

This gross amount begins a series of subtractions as various mandatory and voluntary deductions reduce it to net pay—what actually deposits into your bank account. Understanding each deduction helps you predict take-home pay and identify errors.

Calculate expected take-home as a percentage of gross pay for quick estimates. Someone in the 22% federal bracket with 6% state tax, 7.65% FICA, and $200 per paycheck in benefits contributions might net approximately 60-65% of gross pay. On a $2,885 biweekly gross paycheck, expect $1,730-$1,875 net pay. Higher earners with more benefits and higher tax brackets might net only 55-60%.

Pay frequency affects gross amounts per paycheck but not annual totals. A $60,000 salary yields $5,000 monthly (12 pay periods), $2,307.69 biweekly (26 pay periods), or $2,500 semi-monthly (24 pay periods). Biweekly and semi-monthly amounts differ because biweekly has 26 periods while semi-monthly has 24, despite seeming similar.

Salaried employees receive consistent gross pay each period, while hourly employees see variation based on hours worked and overtime. An hourly employee at $30 per hour working 40 hours gross $1,200 weekly, while a week with 45 hours (5 overtime at time-and-a-half) grosses $1,425 (40 × $30 + 5 × $45).

State and Local Income Tax Withholding

State income tax withholding varies dramatically by location, from zero in nine states to over 10% in high-tax states like California.

States without income tax—Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming—have no state withholding, significantly increasing take-home pay compared to equivalent earnings in states with income tax. A $75,000 salary in Texas nets approximately $4,000-5,000 more annually than in states with 5-7% state tax.

Most states calculate withholding similarly to federal taxes, using withholding tables based on state W-4 forms (or federal W-4 in some cases). State withholding percentages vary from 3-4% in low-tax states to 10-13% in high-tax states. On a $75,000 salary, annual state tax might range from $2,250 (3%) to $9,750 (13%), or $86-375 per biweekly paycheck.

Some states use flat tax rates on all income. Illinois charges 4.95% regardless of income level, simplifying withholding calculations. Others use progressive brackets similar to federal taxes but with different threshold amounts and rates.

Local income taxes add another layer in certain jurisdictions. New York City residents pay city income tax on top of state taxes. Philadelphia charges wage tax. These local taxes can add 1-4% to total withholding, substantially affecting take-home pay.

Compare take-home pay across states when evaluating job offers. A $90,000 offer in Texas (no state tax) might provide more take-home than a $100,000 offer in California (high state tax) after accounting for the $9,000-10,000 in California state taxes on that income.

Optimizing Your Paycheck

Several strategies maximize take-home pay while achieving financial goals.

Adjust W-4 withholding to match actual tax liability, avoiding large refunds (interest-free loans to the government) or surprise tax bills. Use the IRS withholding estimator to calculate appropriate withholding based on your complete tax situation. Submit revised W-4s reflecting changes in life circumstances like marriage, children, or home purchases.

Maximize pre-tax deductions where appropriate to reduce current taxes. Contributing to traditional 401(k)s, HSAs, and FSAs increases take-home pay relative to post-tax contributions with equivalent amounts. At the 22% federal bracket plus 7.65% FICA plus 5% state tax, every $100 pre-tax contribution costs only $65.35 in reduced take-home.

Claim all eligible allowances on state W-4s. Some employees over-withhold state taxes by not claiming appropriate allowances or exemptions, unnecessarily reducing take-home pay throughout the year only to receive refunds later.

Review benefits elections during open enrollment. Health insurance premiums, FSA contributions, and other benefit costs significantly affect take-home pay. Sometimes upgrading health plans with higher premiums but lower deductibles costs less overall when accounting for expected healthcare usage.

Understand pay timing for budgeting. Biweekly employees receive three paychecks in two months per year. Budget based on two paychecks monthly, treating the third as extra for savings or debt reduction. Semi-monthly employees receive exactly two paychecks monthly, simplifying budgeting.

Track year-to-date withholding quarterly to avoid year-end surprises. Calculate whether you're on track to have sufficient withholding to cover estimated taxes. Adjust W-4s mid-year if projections show under or over-withholding.

Understanding every component affecting your paycheck—from FICA taxes and federal withholding to state taxes and benefits deductions—empowers you to verify accuracy, optimize withholding, and plan your budget based on actual take-home pay rather than gross salary figures that overstate available funds.

Federal Income Tax Withholding

Federal income tax withholding typically represents the largest single deduction, varying based on earnings, W-4 elections, and filing status.

Employers calculate withholding using IRS tables based on your W-4 form, which reflects your filing status, number of dependents, other income, and additional withholding requests. The 2020 redesigned W-4 asks direct questions about these factors rather than using the old allowance system.

Withholding approximates your actual tax liability divided across pay periods. If your annual tax obligation is $12,000 and you're paid biweekly (26 periods), withholding should be approximately $462 per paycheck ($12,000 / 26). However, withholding formulas don't perfectly predict final taxes, especially with variable income, multiple jobs, or significant non-wage income.

On a $2,885 biweekly paycheck ($75,000 annually), federal withholding might be $350-450 for a single filer with standard deductions, varying with W-4 elections. Married couples filing jointly typically see lower withholding due to wider tax brackets.

Your pay stub shows federal tax withheld for the current period and year-to-date. Review the year-to-date figure periodically to ensure it's tracking toward your estimated annual liability. By mid-year, federal withholding should be approximately half your estimated annual tax obligation.

If withholding seems too high or low, adjust your W-4. Claim dependents you're entitled to, enter expected deductions exceeding the standard deduction, or request specific additional withholding amounts. Submit revised W-4s to your payroll department anytime, with changes typically effective within one to two pay periods.

Pre-Tax vs. Post-Tax Deductions

Benefits deductions can be pre-tax or post-tax, significantly affecting both take-home pay and tax liability.

Pre-tax deductions reduce taxable income before calculating income tax, lowering both income taxes and FICA taxes (with some exceptions). Common pre-tax deductions include traditional 401(k) contributions, health insurance premiums, HSA contributions, FSA contributions, and transit benefits.

Calculate tax savings from pre-tax deductions by multiplying the deduction by your combined federal and FICA tax rate. A $200 pre-tax 401(k) contribution saves approximately $61 in taxes at the 22% federal bracket plus 7.65% FICA ($200 × 0.2965). Your net reduction in take-home is only $139 even though you saved $200.

If you contribute $200 biweekly pre-tax to a 401(k) from a $2,885 gross paycheck, your taxable income becomes $2,685 rather than $2,885. Federal tax, state tax, and FICA all calculate on the lower amount, reducing total taxes by approximately $60. You sacrifice $140 in current take-home to save $200 in your retirement account.

Post-tax deductions come from net pay after taxes are calculated. Roth 401(k) contributions, some disability insurance, union dues, and charitable contributions through payroll are typically post-tax. These don't reduce current taxes but may provide other benefits.

A $200 Roth 401(k) contribution calculates differently. Your full $2,885 gross pay is subject to income and FICA taxes, perhaps $870 total, leaving $2,015 before the $200 Roth contribution is deducted, resulting in $1,815 take-home. With a traditional 401(k), you'd pay taxes on $2,685, perhaps $810, leaving $1,875 after the $200 contribution—$60 more due to tax savings.

Strategic benefit elections balance immediate tax savings (favoring pre-tax) against future tax-free distributions (favoring post-tax like Roth). For most people in higher current tax brackets who expect lower retirement brackets, traditional pre-tax contributions maximize value. Those expecting higher future tax rates or wanting tax diversification choose Roth post-tax contributions.