Paycheck Calculator
The gap between a salary and a paycheck is wider than most people expect, and it is made of five separate deductions that come out in a particular order. This works through them one at a time so you can see where each dollar goes, rather than only the number at the bottom.
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Formula
The order the deductions come out in
It is not one subtraction but a sequence, and the sequence matters because each step changes what the next one is calculated on. Pre-tax deductions come out first. Income tax is then charged on what is left. Payroll taxes — Social Security and Medicare — are charged on a different figure again. Getting the order wrong is why hand calculations rarely match the payslip.
Your 401(k) saves income tax but not payroll tax
This is the detail almost every mental estimate gets wrong. A traditional 401(k) contribution is deducted before federal and state income tax, so it lowers those. It is not deducted before Social Security and Medicare: you pay the full 7.65 percent on money you never see. Health insurance premiums under a Section 125 plan are different again — they come out before income tax and before payroll tax, which is why a dollar of health premium saves slightly more than a dollar of 401(k).
The practical consequence is that raising your contribution by one percent of salary costs you a little more in take-home than the income-tax saving alone suggests.
Effective rate, not marginal rate
The field above asks for your effective federal rate, which is total federal tax divided by taxable pay — not the bracket you are in. Someone in the 22 percent bracket typically has an effective rate closer to 12 or 14, because the lower brackets and the standard deduction come first. Entering 22 there would understate your take-home by thousands.
The reliable way to find yours is to take a recent payslip, look at year-to-date federal income tax withheld, and divide it by year-to-date taxable gross. That figure already accounts for your own W-4, your filing status and your deductions, which is more accurate than any generic bracket calculation.
Social Security stops, Medicare does not
Social Security is 6.2 percent, but only up to an annual earnings cap that rises most years. Above it the deduction stops entirely, which is why high earners see their paycheck jump partway through the year and drop back every January. Medicare is 1.45 percent with no cap at all, plus an extra 0.9 percent on earnings above $200,000 for a single filer.
Twice a month is not the same as every two weeks
Paid every two weeks you get 26 paychecks; paid twice a month you get 24. The annual total is identical, so the semi-monthly paycheck is larger — but two months a year bring a third biweekly paycheck, and budgeting as though every month has two is the most common cause of a short month. If you are on a biweekly schedule, plan on 24 paychecks and treat the two extras as unallocated.
What this does not include
Post-tax deductions sit outside this: Roth contributions, union dues, garnishments, life insurance above the tax-free limit, and repayments of any kind. They come out after everything above and reduce the final figure further. Bonuses are also withheld differently — usually at a flat supplemental rate — so a bonus paycheck will not match this.
Frequently asked questions
How do I work out my take-home pay?
Take gross pay, subtract pre-tax deductions, apply income tax to what remains, then subtract Social Security and Medicare from gross less only your Section 125 benefits. Divide by the number of paychecks.
Does my 401(k) reduce Social Security tax?
No. Traditional 401(k) contributions avoid income tax but still pay the full 7.65 percent in Social Security and Medicare. Health premiums under a cafeteria plan avoid both.
What tax rate should I enter?
Your effective rate, not your bracket. Divide year-to-date federal tax withheld by year-to-date taxable gross on a recent payslip.
Which states have no income tax?
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. Enter zero for the state rate if you live in one, but check for local taxes in some cities.
Why is my bonus taxed so heavily?
Bonuses are usually withheld at a flat supplemental rate rather than your normal rate. It is a withholding rule, not a higher tax — any excess comes back when you file.