Paycheck Calculator

Understanding Your Paycheck: A Complete Guide

Whether you have just started a new job or are trying to plan your budget more carefully, understanding exactly how much money lands in your bank account each pay period is essential. Your gross salary and your net take-home pay are two very different numbers, and the gap between them can be surprisingly large once federal taxes, state taxes, FICA contributions, and pre-tax deductions are factored in.

How Federal Income Tax Is Calculated

The United States uses a progressive federal income tax system with seven brackets for the 2026 tax year. Your income is not taxed at a single flat rate. Instead, each portion of your earnings is taxed at the rate for that bracket. For example, a single filer earning $85,000 in taxable income pays 10% on the first $12,400, 12% on income from $12,400 to $50,400, and 22% on income from $50,400 to $85,000. The result is an effective tax rate well below the 22% marginal bracket.

FICA Taxes: Social Security and Medicare

Every W-2 employee pays FICA taxes, which fund Social Security and Medicare. The Social Security tax rate is 6.2% on earnings up to the annual wage base of $184,500 for 2026. Medicare is taxed at 1.45% on all earnings with no cap. If you earn more than $200,000 in a calendar year, an additional 0.9% Medicare surtax applies to earnings above that threshold. Your employer matches the standard 6.2% Social Security and 1.45% Medicare amounts, but the additional Medicare surtax is paid only by the employee.

Pre-Tax Deductions Lower Your Tax Bill

Contributions to a traditional 401(k) plan and employer-sponsored health insurance premiums are typically deducted from your pay before income taxes are calculated. This reduces your taxable income and therefore your federal and state income tax liability. For example, contributing 6% of a $75,000 salary to a 401(k) removes $4,500 from your taxable income each year, saving hundreds of dollars in taxes depending on your bracket.

State Income Tax Variation

State income taxes vary dramatically across the country. Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — impose no state income tax on wages. On the other end, California's top marginal rate reaches 13.3%, and Oregon's top rate is 9.9%. This calculator uses simplified effective rates for a quick estimate, but your actual state tax may differ based on local brackets, credits, and deductions specific to your state.

Pay Frequency Matters

The frequency of your paycheck affects the size of each payment but not your annual total. Weekly pay (52 checks) means smaller individual checks compared to monthly pay (12 checks). However, biweekly pay results in 26 checks per year, which means two months will have three paychecks instead of two — a helpful budgeting detail many people overlook. Semi-monthly pay gives exactly 24 checks, making it easy to align with monthly bills.

Tips for Maximizing Your Take-Home Pay

Review your W-4 withholding annually, especially after major life changes like marriage, having a child, or buying a home. Increasing your 401(k) contributions reduces taxable income while building retirement savings. If your employer offers a Health Savings Account (HSA), contributions are also pre-tax and can further reduce your tax liability. Finally, if you live near a state border, be aware that some states have reciprocal tax agreements that may affect your withholding.