How Paycheck Taxes Work
Your paycheck is reduced by several types of taxes and deductions before money reaches your bank account. Understanding each line helps you budget and compare job offers.
1. Federal income tax withholding
Employers withhold federal income tax based on your W-4, pay amount, and IRS tax tables. Withholding uses marginal brackets — you do not pay one flat rate on all income. The 2026 standard deduction is $16,100 (single) or $32,200 (married filing jointly).
2. FICA: Social Security and Medicare
FICA is separate from income tax. Employees pay 6.2% Social Security on wages up to $184,500 (2026) and 1.45% Medicare on all wages. Additional Medicare Tax (0.9%) applies to wages over $200,000 in a calendar year.
3. State and local income tax
Most states tax wages; nine states do not. Cities like New York City and Philadelphia add local income tax. Your state selection in a paycheck calculator determines this estimate.
4. Pre-tax and post-tax deductions
Traditional 401(k), health insurance, HSA, and FSA reduce taxable income. Roth 401(k) and garnishments are post-tax — they reduce net pay but not current income tax withholding.
Common questions
What is a paycheck calculator and how does it work?
A paycheck calculator estimates your take-home pay (net pay) after taxes and deductions. You enter gross income (salary or hourly rate), pay frequency, filing status, state, and optional 401(k) or health insurance. The tool applies federal income tax brackets, state tax, FICA (Social Security and Medicare), and pre-tax deductions to show what lands in your bank account each pay period.
What is the difference between gross pay and net pay?
Gross pay is your total earnings before any withholdings. Net pay (take-home pay) is what you receive after federal and state taxes, Social Security, Medicare, and deductions such as 401(k) or health insurance. For example, a $75,000 salary does not mean $6,250 per month net — withholding typically reduces that amount significantly.
How much federal tax is taken out of my paycheck?
Federal income tax withholding depends on taxable wages, filing status (single, married, head of household), and W-4 elections. The IRS uses marginal tax brackets — not a flat rate on all income. For 2026, the standard deduction is $16,100 (single) or $32,200 (married filing jointly). Higher earners pay higher marginal rates, up to 37% on income above bracket thresholds.
How much is Social Security and Medicare tax on my paycheck?
Employees pay 6.2% Social Security on wages up to the annual wage base ($184,500 in 2026) and 1.45% Medicare on all wages. Once year-to-date wages exceed $200,000, employers also withhold 0.9% Additional Medicare Tax on amounts above that threshold. These FICA taxes are separate from federal income tax.
Does 401(k) reduce taxes on my paycheck?
Traditional 401(k) contributions through payroll are pre-tax for federal income tax and usually state income tax. They lower taxable income, so less tax is withheld. They generally do not reduce Social Security and Medicare tax (except certain Section 125 plans). Roth 401(k) is post-tax and does not reduce current withholding.
How is state income tax calculated on a paycheck?
Most states with income tax use either a flat rate or progressive brackets on taxable wages. Nine states have no broad wage income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Some cities (e.g., New York City, Philadelphia) add local income tax on top of state tax.