How your paycheck is worked out
Every paycheck goes through the same steps:
- Gross pay for the period – your salary divided by the number of paychecks (52, 26, 24 or 12), or your hours times your rate.
- Pre-tax deductions – Section 125 health premiums come off before every tax; traditional 401(k) contributions come off before income tax only.
- Federal income tax – the IRS percentage method in Publication 15-T, driven by your Form W-4.
- FICA – 6.2% Social Security (until wages reach $184,500 in 2026) and 1.45% Medicare, plus 0.9% Additional Medicare on wages over $200,000.
- State and local taxes – none in nine states, a flat rate in many others, and graduated brackets in the rest.
Worked example: $60,000 a year, paid every two weeks
Single, $60,000 salary, bi-weekly, no state income tax
The annualized wage of $60,000 less the $8,600 Step 1(g) adjustment leaves $51,400. The 2026 single table gives $1,240 plus 12% of the amount over $19,900 – $5,020 a year, or $193 per paycheck. Social Security and Medicare add $177, leaving $1,938 take-home.
- Take-home pay per year
- $50,390
- Federal income tax withheld
- $193.08
- Texas income tax withheld
- $0.00no state income tax on wages
| Item | Per paycheck | Per year |
|---|---|---|
| Gross pay | $2,307.69 | $60,000.00 |
| Federal income tax | −$193.08 | −$5,020.08 |
| Social Security (6.2%) | −$143.08 | −$3,720.08 |
| Medicare (1.45%) | −$33.46 | −$869.96 |
| Take-home pay | $1,938.07 | $50,389.88 |
Married filing jointly on a single $100,000 salary, take-home pay is about $84,710 a year, because the joint table starts each bracket much later.
The W-4 in one minute
| W-4 step | What it changes |
|---|---|
| Step 1(c) filing status | Which annual table is used, and whether $8,600 or $12,900 is deducted |
| Step 2 checkbox | Halved brackets for two-earner households – more withheld |
| Step 3 dependents | Your annual credit amount, divided across paychecks |
| Step 4(a) other income | Added to annual wages before the table |
| Step 4(b) deductions | Deductions above the standard deduction, subtracted first |
| Step 4(c) extra | A flat extra amount withheld from every paycheck |
What this calculator does not include
Local income taxes (New York City, Philadelphia, Detroit, Ohio cities and Pennsylvania’s earned income tax), state disability insurance in the states that have it, and after-tax deductions such as Roth 401(k) or union dues are not shown. Bonuses are often withheld at a flat 22% federal rate as supplemental wages, which this calculator does not model. Social Security stops once your wages for the year pass $184,500, so very high earners see bigger paychecks late in the year.