How Your Paycheck Is Calculated
The gap between the salary on your offer letter and the money in your bank account surprises almost everyone. Four separate deductions come out of a standard American paycheck, each calculated on a different base with its own rules. They are applied in a specific order, and once you know that order the number on your paystub stops being a mystery.
Step 1: Gross pay
Gross pay is your total compensation before anything is withheld. If you are salaried, it is your annual salary divided by the number of pay periods. If you are paid hourly, it is your rate multiplied by hours worked. This calculator assumes 52 weeks of work per year in hourly mode, which is the standard convention because paid time off is normally included in that figure.
Step 2: Pre-tax deductions
Before any tax is computed, employers subtract certain benefit contributions. Traditional 401(k) and 403(b) contributions reduce the income subject to federal and state income tax, but not the income subject to Social Security and Medicare. Section 125 cafeteria-plan deductions — most health insurance premiums, HSA and FSA contributions — reduce both income tax and FICA. That difference is why two colleagues with identical salaries can see different Social Security withholding.
Step 3: Federal income tax
Federal income tax is not applied to your full salary. The IRS first subtracts the standard deduction, which for 2026 is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household. What remains is your taxable income, and it is fed through seven progressive brackets.
Progressive means each rate applies only to the slice of income inside its own band. A single filer earning $75,000 has $58,900 of taxable income after the standard deduction. The first $12,400 is taxed at 10%, the portion up to $50,400 at 12%, and only the final $8,500 at 22%. Their top bracket is 22%, but the actual federal bill lands near 10.2% of gross pay. This is the most misunderstood part of the US tax code: moving into a higher bracket never reduces your take-home pay.
Step 4: FICA and state tax
Social Security and Medicare are withheld from the first dollar, with no standard deduction and no brackets. State income tax, where it exists, runs on a completely separate set of brackets and deductions published by each state. Subtract all four and what is left is your net pay.
2026 Federal Income Tax Brackets
These are the rates published by the IRS in Revenue Procedure 2025-32 for tax year 2026, the returns filed in early 2027. The One Big Beautiful Bill Act made the seven-rate structure permanent and applied a larger inflation adjustment to the bottom two brackets.
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 | $0 – $17,700 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 | $17,700 – $67,450 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 | $67,450 – $105,700 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 | $105,700 – $201,775 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 | $201,775 – $256,200 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 | $256,200 – $640,600 |
| 37% | Over $640,600 | Over $768,700 | Over $640,600 |
| Standard deduction | $16,100 | $32,200 | $24,150 |
Social Security and Medicare (FICA) in 2026
FICA stands for the Federal Insurance Contributions Act. It is a flat payroll tax with no deduction and no brackets, and it is usually the largest single line on a middle-income paystub after federal income tax.
- Social Security — 6.2% of covered wages, up to the 2026 wage base of $184,500. Cross that ceiling and withholding stops for the rest of the calendar year, capping your contribution at $11,439.00.
- Medicare — 1.45% of all covered wages, with no upper limit. Every dollar is subject to it.
- Additional Medicare Tax — 0.9% on wages above $200,000 for single and head-of-household filers, or $250,000 for married couples filing jointly. Your employer withholds it but does not match it. Note that these two thresholds are fixed in statute and are not adjusted for inflation.
Your employer pays a matching 6.2% and 1.45% on your behalf, so 15.3% of your wages in total flows into Social Security and Medicare. Self-employed workers pay both halves themselves through the SECA self-employment tax, though they may deduct the employer half.
State Income Tax Rates 2026: All 50 States
Forty-one states plus the District of Columbia tax wage income. Fifteen use a single flat rate and twenty-six plus D.C. use graduated brackets. Nine states tax no wage income at all. The table below shows the 2026 rate range and the top bracket threshold for a single filer in every jurisdiction, and it is generated from the same data the calculator uses, so the two can never disagree.
| State | Type | Rate range | Top rate starts at | Std. deduction |
|---|---|---|---|---|
| Alabama | Graduated | 2%–5% | $3,000 | $4,500 |
| Alaska | None | 0% | — | — |
| Arizona | Flat | 2.5% | All income | $16,100 |
| Arkansas | Graduated | 2%–3.9% | $4,600 | $2,470 |
| California | Graduated | 1%–13.3% | $1,000,000 | $5,706 |
| Colorado | Flat | 4.4% | All income | $16,100 |
| Connecticut | Graduated | 2%–6.99% | $500,000 | $15,000 |
| Delaware | Graduated | 2.2%–6.6% | $60,000 | $3,250 |
| District of Columbia | Graduated | 4%–10.75% | $1,000,000 | $16,100 |
| Florida | None | 0% | — | — |
| Georgia | Flat | 5.19% | All income | $12,000 |
| Hawaii | Graduated | 1.4%–11% | $325,000 | $5,544 |
| Idaho | Flat | 5.3% | $4,811 | $16,100 |
| Illinois | Flat | 4.95% | All income | $2,925 |
| Indiana | Flat | 2.95% | All income | $1,000 |
| Iowa | Flat | 3.8% | All income | $16,100 |
| Kansas | Graduated | 5.2%–5.58% | $23,000 | $12,765 |
| Kentucky | Flat | 3.5% | All income | $3,360 |
| Louisiana | Flat | 3% | All income | $12,875 |
| Maine | Graduated | 5.8%–7.15% | $64,849 | $21,400 |
| Maryland | Graduated | 2%–6.5% | $1,000,000 | $6,550 |
| Massachusetts | Graduated | 5%–9% | $1,083,150 | $4,400 |
| Michigan | Flat | 4.25% | All income | $5,900 |
| Minnesota | Graduated | 5.35%–9.85% | $203,150 | $15,300 |
| Mississippi | Flat | 4% | $10,000 | $8,300 |
| Missouri | Graduated | 2%–4.7% | $9,436 | $16,100 |
| Montana | Graduated | 4.7%–5.65% | $47,500 | $16,100 |
| Nebraska | Graduated | 2.46%–4.55% | $24,760 | $8,850 |
| Nevada | None | 0% | — | — |
| New Hampshire | None | 0% | — | — |
| New Jersey | Graduated | 1.4%–10.75% | $1,000,000 | $1,000 |
| New Mexico | Graduated | 1.5%–5.9% | $210,000 | $16,100 |
| New York | Graduated | 3.9%–10.9% | $25,000,000 | $8,000 |
| North Carolina | Flat | 3.99% | All income | $12,750 |
| North Dakota | Graduated | 1.95%–2.5% | $244,825 | $16,100 |
| Ohio | Flat | 2.75% | $26,050 | $2,400 |
| Oklahoma | Graduated | 2.5%–4.5% | $7,200 | $7,350 |
| Oregon | Graduated | 4.75%–9.9% | $125,000 | $2,910 |
| Pennsylvania | Flat | 3.07% | All income | None |
| Rhode Island | Graduated | 3.75%–5.99% | $186,450 | $16,450 |
| South Carolina | Graduated | 3%–6% | $18,230 | $16,100 |
| South Dakota | None | 0% | — | — |
| Tennessee | None | 0% | — | — |
| Texas | None | 0% | — | — |
| Utah | Flat | 4.5% | All income | $16,100 |
| Vermont | Graduated | 3.35%–8.75% | $249,700 | $12,950 |
| Virginia | Graduated | 2%–5.75% | $17,000 | $9,680 |
| Washington | None | 0% | — | — |
| West Virginia | Graduated | 2.22%–4.82% | $60,000 | $2,000 |
| Wisconsin | Graduated | 3.5%–7.65% | $332,720 | $13,960 |
| Wyoming | None | 0% | — | — |
Standard deduction column combines the state standard deduction and any personal exemption, for a single filer. Maryland figures exclude county income tax, which averages about 3.2% and is applied separately by the calculator.
States with the highest income tax on wages
California tops out at 13.3% once the 1% Mental Health Services surcharge on income over $1 million is included. Hawaii reaches 11%, New York 10.9% before New York City's local surcharge of up to 3.876%, New Jersey 10.75%, Oregon 9.9% and Minnesota 9.85%. Those top rates apply only to income far above the median, so a typical worker in New York or California pays an effective state rate nearer 4% to 6% than the headline figure.
What changed for 2026
Eight states cut individual income tax rates on 1 January 2026. Indiana dropped its flat rate to 2.95%, Kentucky to 3.5%, Mississippi to 4.0%, North Carolina to 3.99%, and Nebraska cut its top rate to 4.55%. Ohio completed its transition to a flat 2.75% on income above $26,050, becoming the sixteenth flat-tax state. Oklahoma consolidated six brackets into three with a 4.5% top rate, and Montana restructured to 4.7% and 5.65%. New York also reduced the rates in its five lowest brackets.
States With No State Income Tax
Nine states impose no income tax on wages. For a worker earning $85,000, moving from a high-tax state to one of these can add roughly $4,000 to $6,000 in annual take-home pay with no change in gross salary. That said, no state runs on nothing: revenue simply arrives through a different door, usually sales tax, property tax or resource extraction.
| State | Tax on wages | Avg. combined sales tax | Effective property tax | Main revenue source |
|---|---|---|---|---|
| Alaska | 0% | 1.8% | 1.07% | Oil and gas severance revenue |
| Florida | 0% | 7.0% | 0.79% | Sales tax and tourism |
| Nevada | 0% | 8.2% | 0.48% | Gaming and sales tax |
| New Hampshire | 0% | 0.0% | 1.61% | Property tax, no sales tax |
| South Dakota | 0% | 6.1% | 1.01% | Sales and property tax |
| Tennessee | 0% | 9.6% | 0.55% | Highest average sales tax in the US |
| Texas | 0% | 8.2% | 1.47% | Property tax and sales tax |
| Washington | 0% | 9.4% | 0.76% | Sales tax and business B&O tax |
| Wyoming | 0% | 5.4% | 0.55% | Mineral and coal severance revenue |
Sales and property tax figures are approximate statewide averages and vary by county and municipality.
Two of these deserve a footnote. New Hampshire historically taxed interest and dividend income, but that tax was fully repealed and no longer applies. Washington levies a 7% tax on long-term capital gains above a high annual exclusion, which does not touch salary or hourly wages. For a wage earner, both are genuinely 0%.
A worked comparison: $100,000 in Texas vs. California
A single filer earning $100,000 pays identical federal tax and identical FICA in both states — exactly $13,170 in federal income tax and $7,650 in Social Security and Medicare. The difference is entirely at the state level. Texas withholds nothing; California takes $5,208, plus a separate State Disability Insurance contribution this calculator does not model. The Texan takes home $79,180 while the Californian keeps $73,972 — a gap of $5,208 a year, or almost exactly $200 per bi-weekly paycheck. You can reproduce both figures in the calculator above.
Before treating that as free money, price the offset. Texas property taxes average 1.47% of assessed value, among the highest in the country, so a $400,000 home carries a roughly $5,900 annual bill, and combined sales tax runs above 8%. For renters and lower earners the no-income-tax states usually come out ahead; for homeowners the arithmetic is much closer than the headline suggests. Run both scenarios above, then subtract realistic housing costs before deciding.
How Pre-Tax Deductions Change Your Paycheck
Pre-tax benefits are the only lever most employees can pull that reduces tax without reducing what they actually receive in value. The two categories behave differently and it matters:
401(k) and 403(b) contributions
Traditional retirement deferrals reduce federal and state taxable income but remain fully subject to Social Security and Medicare. For 2026 the employee elective deferral limit is $24,500, with an extra $8,000 catch-up contribution allowed from age 50, and a higher $11,250 catch-up for those who turn 60 to 63 during the year. A single filer earning $90,000 in the 22% bracket who contributes $10,000 saves roughly $2,200 in federal tax plus their state's marginal rate, while their Social Security and Medicare withholding is unchanged.
Section 125 cafeteria plans
Employer health insurance premiums, health savings account contributions and flexible spending account elections made through a Section 125 plan are exempt from income tax and from Social Security and Medicare. That makes each dollar roughly 7.65% more valuable than a 401(k) dollar of the same size. The trade-off is that reducing your Social Security wage base very slightly reduces your eventual retirement benefit.
Methodology and Sources
Every figure in this calculator is traceable to a primary government publication or to the Tax Foundation's annual state review. The data was last verified on .
What the calculator does
- Computes annualised gross pay from your salary or hourly rate.
- Subtracts pre-tax deductions from the appropriate tax bases (401(k) from income tax only; Section 125 from income tax and FICA).
- Subtracts the federal standard deduction and applies the 2026 federal brackets for your filing status.
- Applies 6.2% Social Security up to the $184,500 wage base and 1.45% Medicare on all wages, plus the 0.9% Additional Medicare Tax above the statutory threshold.
- Subtracts the state standard deduction and personal exemption and applies that state's 2026 brackets for your filing status.
- Divides the annual result by your number of pay periods.
Known limitations — read this before relying on the number
Being clear about what a tool cannot do is the only honest way to present one. These are the gaps:
- This estimates annual tax liability, not payroll withholding. Your employer uses the IRS percentage method in Publication 15-T, which is an approximation designed to land close to your liability over a full year. Individual paychecks can therefore differ by a few dollars, and bonuses are usually withheld at a flat 22% supplemental rate.
- Tax credits are not modelled. The Child Tax Credit, Earned Income Tax Credit and education credits can reduce your actual bill substantially. If you claimed dependants on your Form W-4, your real withholding will be lower than shown.
- Local and city taxes are excluded, with the single exception of Maryland's county income tax, which is applied at the 3.2% statewide average. New York City, Yonkers, Philadelphia, Detroit, Columbus, most of Ohio's school districts and every county in Indiana levy their own income tax that is not included here.
- State disability and family leave contributions are excluded. California SDI, New Jersey's SUI/SDI/FLI, New York PFL, Washington Paid Family Leave and similar programmes add roughly 0.5% to 1.2% of wages in the states that operate them.
- Head-of-household state brackets are approximated. Most states apply the same bracket thresholds to head-of-household filers as to single filers, and that is what this tool does, using each state's head-of-household deduction where one is published. A handful of states, California among them, publish separate head-of-household schedules that are more generous, so those filers may see a slight overestimate of state tax.
- Itemised deductions are not modelled. The calculator always applies the standard deduction, which is correct for roughly 90% of filers since 2018.
Primary sources
- IRS — Tax inflation adjustments for tax year 2026Revenue Procedure 2025-32. Source for the federal brackets and the standard deduction.
- Social Security Administration — Contribution and Benefit BaseSource for the $184,500 Social Security wage base for 2026.
- IRS Topic 560 — Additional Medicare TaxSource for the 0.9% surtax and its $200,000 and $250,000 statutory thresholds.
- IRS — 401(k) limit increases to $24,500 for 2026Notice 2025-67. Source for the elective deferral and catch-up limits.
- Tax Foundation — 2026 State Income Tax Rates and BracketsSource for state brackets, standard deductions and personal exemptions.
- California FTB — 2026 Form 540-ES instructionsSource for California's 2026 standard deduction of $5,706 and $11,412.
- Pennsylvania DOR — Gross CompensationSource for Pennsylvania's treatment of 401(k) elective deferrals as taxable compensation.
- IRS Publication 15-T — Federal Income Tax Withholding MethodsThe method your employer actually uses, and the reason a paystub can differ slightly from this estimate.
Frequently Asked Questions
How accurate is this paycheck calculator?
It uses the official 2026 federal brackets and standard deduction from IRS Revenue Procedure 2025-32, the $184,500 Social Security wage base published by the SSA, and each state's 2026 published rates. For a salaried employee taking the standard deduction with a simple Form W-4, the annual figures are accurate to the dollar. Individual paychecks may differ by a few dollars because employers use the IRS Publication 15-T withholding method rather than a straight annual calculation, and because tax credits, local city taxes and state disability contributions are not modelled.
What is FICA tax and who pays it?
FICA is the Federal Insurance Contributions Act, and it funds Social Security and Medicare. Employees pay 6.2% of wages for Social Security up to the 2026 wage base of $184,500, plus 1.45% of all wages for Medicare, a combined 7.65%. Employers match that dollar for dollar. High earners also pay an Additional Medicare Tax of 0.9% on wages above $200,000 for single filers or $250,000 for joint filers, which employers withhold but do not match.
Which states have no state income tax in 2026?
Nine states levy no tax on earned wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. New Hampshire has repealed its interest and dividends tax, and Washington taxes only certain long-term capital gains, so neither touches salary or hourly wages. These states recover revenue through higher sales tax, property tax or severance taxes on natural resources.
How much is taken out of my paycheck for taxes?
For a typical single filer earning $60,000 to $80,000, total withholding is usually 20% to 30% of gross pay: roughly 8% to 12% federal income tax, a flat 7.65% for Social Security and Medicare, and 0% to 6% state income tax depending on where you live. Someone earning $75,000 in Texas keeps noticeably more per paycheck than someone earning the same in California or New York.
What is the difference between gross pay and net pay?
Gross pay is your total compensation before anything is withheld, the number quoted in a job offer. Net pay, or take-home pay, is what reaches your bank account after federal income tax, state income tax, Social Security, Medicare and any voluntary deductions such as retirement contributions or health premiums.
How do I convert an hourly wage into an annual salary?
Multiply your hourly rate by the hours you work per week, then by 52. At 40 hours per week, $25 per hour equals $52,000 per year and $30 per hour equals $62,400. A shortcut for a standard full-time schedule is to double your hourly rate and add three zeros, so $25 per hour is roughly $50,000 per year. Switch the calculator to Hourly mode for the exact figure with taxes included.
Does a raise that moves me into a higher tax bracket reduce my take-home pay?
No. The US uses a progressive marginal system, so only the dollars inside the higher bracket are taxed at the higher rate. If the 22% bracket begins at $50,400 of taxable income, a raise from $50,000 to $52,000 taxes just $1,600 at 22% while everything below stays at 10% and 12%. A raise always increases your net pay.
What is the Social Security wage base limit for 2026?
The 2026 Social Security wage base is $184,500, up from $176,100 in 2025. You pay 6.2% on wages up to that ceiling, a maximum of $11,439.00 for the year. Wages above the limit are exempt, which is why very high earners see their paycheck grow slightly late in the year. Medicare has no ceiling and applies to every dollar you earn.
Does a 401(k) contribution reduce Social Security and Medicare tax?
No. Traditional 401(k) and 403(b) contributions reduce your federal and state taxable income but remain fully subject to Social Security and Medicare. Only Section 125 cafeteria-plan deductions, which include most employer health insurance premiums plus HSA and FSA contributions, reduce FICA as well as income tax. Pennsylvania is a further exception: it taxes 401(k) contributions in the year they are made, so they give no state tax saving there.
Why is my actual paystub slightly different from this estimate?
Employers do not compute your annual tax and divide it up. They use the percentage method tables in IRS Publication 15-T, which estimate your liability from each individual payment. Rounding, mid-year raises, bonuses withheld at the flat 22% supplemental rate, benefit changes and any extra withholding or credits you claimed on your Form W-4 all create small differences. Over a full year the two converge closely.
How can I legally increase my take-home pay?
Contributing to a traditional 401(k), a health savings account or a flexible spending account lowers your taxable income and therefore your withholding, although FICA still applies to 401(k) contributions. Reviewing your Form W-4 after a marriage, a new child or a second job prevents chronic over-withholding, since a large refund simply means you lent the government money for free. Moving to a no-income-tax state is the largest single lever, but weigh it against local sales tax, property tax and cost of living.