Take-Home Pay Calculator

Every US paycheck goes through a standardized series of deductions before you receive net pay. Understanding the order matters because pre-tax deductions reduce the base for subsequent tax calculations.

Employers do NOT calculate your exact federal income tax each paycheck. Instead, they use IRS withholding tables (Publication 15-T) based on your W-4 form to withhold a reasonable estimate that will approximately match your annual tax liability.

The current W-4 form (post-2020 redesign) requires you to specify filing status, multi-job adjustments, dependents (for Child Tax Credit withholding reduction), other income, and additional withholding. Correctly filled out, withholding closely matches actual tax owed, resulting in a small refund or small amount owed at year-end.

Common problems: forgetting to update the W-4 after marriage/divorce, not accounting for a second job or spouse's job in the multi-job adjustment (leads to under-withholding), or claiming excessive dependents (leads to under-withholding). Use IRS Withholding Estimator (irs.gov/withholding-estimator) to check your W-4.

FICA (Federal Insurance Contributions Act) taxes fund Social Security and Medicare. They are separate from federal income tax and cannot be reduced by deductions, contributions, or credits (except by earning less).

Social Security tax is 6.2% on wages up to the annual wage base ($176,100 in 2026, indexed to national wage growth). Earnings above the wage base are NOT subject to Social Security tax. High earners see their FICA rate drop mid-year when they cross the wage base — a subtle boost to take-home pay in late months of the year.

Medicare tax is 1.45% on ALL wages with no ceiling. High earners pay an Additional Medicare Tax of 0.9% on wages above $200,000 (single) or $250,000 (MFJ). This additional 0.9% is withheld by employers on individual employees crossing $200K without regard to filing status; reconciliation happens on the tax return.

Self-employed workers pay both the employee and employer portions of FICA (12.4% Social Security + 2.9% Medicare + 0.9% additional Medicare on income above thresholds) — 15.3% base rate. This is the self-employment tax on Schedule SE.

State income tax dramatically changes take-home pay. Nine states have no state income tax on wages: Alaska, Florida, Nevada, New Hampshire (only interest/dividends), South Dakota, Tennessee, Texas, Washington (limited capital gains only), Wyoming.

Among states with income tax, California's top rate is 13.3% (highest in US), followed by Hawaii 11%, New York 10.9%, New Jersey 10.75%, DC 10.75%, Oregon 9.9%, Minnesota 9.85%. Many states use progressive brackets similar in structure to the federal system.

Local income tax adds another layer in some jurisdictions. New York City residents pay 3.078-3.876% on top of state; Yonkers, Newark, Detroit, Philadelphia, and several Ohio cities also charge local income tax. Check your city payroll setup.

Every dollar of pre-tax deduction reduces federal income tax and state income tax by your marginal rate. For a taxpayer at 22% federal + 5% state marginal rate, a $1,000 pre-tax deduction saves $270 in tax — meaning the $1,000 costs you $730 in take-home pay while giving you $1,000 in the deducted account.

The highest-value pre-tax deductions to maximize (in priority order): (1) 401(k) up to full employer match, (2) HSA if you have a High-Deductible Health Plan (triple tax advantage — deductible, growth, and withdrawal), (3) Traditional 401(k) beyond match up to $23,500 limit if in a high tax bracket now expecting lower in retirement, (4) FSAs for foreseeable medical and dependent care expenses.

Roth 401(k) contributions come from AFTER-tax pay, so they do not reduce current take-home value in the same way. They trade current tax for future tax-free growth. Whether Roth or Traditional is better depends on current vs expected retirement marginal tax rates.

Bonuses and other "supplemental wages" (commissions, severance, back-pay) are typically withheld at a flat federal rate of 22% (or 37% for supplemental wages above $1 million per year) regardless of your actual marginal rate.

This causes confusion. Someone in the 12% marginal bracket sees their bonus withheld at 22% and feels heavily taxed; someone in the 32% bracket sees the same 22% withholding and feels under-withheld. Both are transitory — actual tax owed on the bonus reconciles at year-end when you file the tax return.

If you get a large bonus and your normal marginal rate is significantly higher than 22%, expect to owe additional tax at year-end. If your marginal rate is 12%, expect a larger refund. Neither situation is a "problem" — it is just how withholding rules work on supplemental pay.