Paycheck Estimator

Your paycheck starts with gross pay — your annual salary divided by the number of pay periods in a year (26 for biweekly, 24 for semimonthly, 52 for weekly). From that gross, employers subtract four categories: federal income tax, FICA (Social Security and Medicare), state and local income tax where applicable, and pre-tax deductions you've elected (traditional 401(k), HSA, FSA, qualifying health insurance premiums).

Federal income tax is bracketed. For a single filer in 2024, the first $11,600 of taxable income is taxed at 10%, the next $35,550 at 12%, the next $53,375 at 22%, and so on. Only the income inside each bracket is taxed at that bracket's rate — so a $90,000 salary is not taxed at 22% on the whole amount, only on the slice above $47,150.

FICA is flat: 6.2% Social Security up to a wage base ($168,600 in 2024) plus 1.45% Medicare on every dollar earned, with an extra 0.9% Medicare surtax above $200,000 for single filers. Together, that's 7.65% on most paychecks and is the line you cannot legally reduce with deductions.

Start with $75,000 gross. A 5% traditional 401(k) contribution removes $3,750 from taxable income, leaving $71,250. Subtract the single standard deduction ($14,600) to get $56,650 of federal taxable income.

Federal tax on $56,650 (single) works out to roughly $7,841. Add FICA: 6.2% × $75,000 = $4,650 plus 1.45% × $75,000 = $1,088, total $5,738. Assume a flat 5% state tax: $3,750. Total taxes withheld: $17,329. Plus the $3,750 retirement contribution = $21,079 of total deductions on the year.

Annual take-home: $75,000 − $21,079 = $53,921. Divided across 26 biweekly checks: about $2,074 per check. Effective tax rate: about 23%. Your federal marginal rate is 22%, but your effective rate is lower because the bracketed structure averages down.

Local (city or county) income tax. New York City, San Francisco, Philadelphia, and several other jurisdictions add 1–4% on top of state tax.

Pre-tax benefits beyond 401(k): HSA, FSA, transit benefits, and most employer-sponsored health insurance premiums. Each of these lowers federal and FICA taxable income — sometimes by thousands of dollars a year.

Tax credits and post-W-4 adjustments. The Child Tax Credit, Saver's Credit, and Earned Income Credit can lower the tax actually owed at year-end well below what's withheld each pay period.

Bonus withholding. Most employers withhold federal tax on bonuses at a flat 22% supplemental rate (37% above $1M), which is often higher or lower than your true marginal rate. The difference gets reconciled when you file.

After any change in filing status (marriage, divorce), the birth of a child, a spouse starting or stopping work, a significant raise, or a year where you owed more than $1,000 at tax time. The IRS Tax Withholding Estimator (irs.gov) is the most accurate tool for fine-tuning your W-4; this calculator is a faster sanity check.

For a more accurate take-home figure, pair this estimate with your latest pay stub: the year-to-date federal, state, and FICA columns reveal exactly what your real effective rate has been so far.

Not every deduction reduces your paycheck by its full amount. Pre-tax contributions come out of gross pay before federal income tax is calculated, so a $200 contribution in the 22% bracket reduces net pay by roughly $156, not $200. The gap is the tax you did not pay.

The main pre-tax categories are traditional 401(k) or 403(b) contributions, health insurance premiums under a Section 125 cafeteria plan, health savings account (HSA) contributions, flexible spending accounts for medical and dependent care, commuter benefits, and group term life above employer-paid coverage. Section 125 premiums and HSA contributions made through payroll also avoid the 7.65% FICA tax, which 401(k) contributions do not.

That FICA exemption makes the HSA the single most tax-efficient payroll deduction available: contributions avoid federal income tax, Social Security tax, and Medicare tax on the way in; growth is untaxed; and qualified medical withdrawals are untaxed. For a worker in the 22% bracket, a $300 monthly HSA contribution reduces take-home pay by only about $210.

Roth 401(k) contributions work the other way — they are taken after tax, so they reduce net pay dollar for dollar, but qualified withdrawals in retirement are tax-free. Neither is universally better: the traditional version wins if your tax rate will be lower in retirement, the Roth wins if it will be higher, and splitting contributions between the two hedges the uncertainty.