How paycheck taxes work (2026)

From gross pay to take-home pay

Your take-home pay is what is left of your gross pay after pre-tax benefits, taxes and other deductions. Understanding each step makes it easy to check your pay stub, plan a raise, or decide whether to change your W-4.

The order of a paycheck

Gross pay — salary or hourly wages, overtime, bonuses and tips.
Minus pre-tax deductions — traditional 401(k), HSA, health premiums.
Minus federal income tax — based on your W-4.
Minus FICA — Social Security 6.2% and Medicare 1.45%.
Minus state and local income tax — where they exist.
Minus state payroll programs — disability and paid-leave premiums in some states.
Minus post-tax deductions — Roth 401(k), garnishments, union dues.
Equals net pay — your take-home pay.

Step 1: Gross pay

Gross pay is everything your employer owes you for the pay period before withholding. Salaried employees divide their annual salary by the number of pay periods (26 for biweekly, 24 for semi-monthly, 12 for monthly, 52 for weekly). Hourly employees multiply hours by their rate, and non-exempt employees earn overtime at 1.5 times their regular rate for hours over 40 in a week under federal law. Bonuses, commissions and reported tips are also part of gross pay. See our hourly to salary guide, overtime guide and bonus tax guide.

Step 2: Pre-tax deductions

Certain benefits are taken out before income tax is calculated, which lowers your taxable wages. Common examples are contributions to a traditional 401(k), a health savings account, and employer health insurance premiums paid through a Section 125 cafeteria plan. Traditional 401(k) contributions reduce income tax but not Social Security and Medicare; HSA and health premiums through a cafeteria plan reduce both. A few states do not follow the federal treatment. Our pre-tax deductions guide has the details and 2026 limits.

Step 3: Federal income tax withholding

Employers withhold federal income tax using the information on your Form W-4 and the IRS's Publication 15-T tables. Under the percentage method used by most payroll software, your wages for the period are multiplied to an annual amount, adjusted for your W-4 entries (other income, deductions, and a standard-deduction allowance unless you checked the multiple-jobs box), and run through the tax brackets for your filing status. The result is divided back to a per-paycheck amount, reduced by any credits you claimed (such as for children), and increased by any extra withholding you requested.

Federal brackets are progressive: only the income inside each bracket is taxed at that bracket's rate. Moving into a higher bracket never reduces your take-home pay below what you had before. See the full 2026 federal brackets and our W-4 guide.

Step 4: Social Security and Medicare (FICA)

Social Security: 6.2% of wages up to the 2026 wage base of $184,500 (a maximum of $11,439). Wages above the base are not subject to Social Security tax.
Medicare: 1.45% of all wages, with no cap.
Additional Medicare tax: 0.9% on wages above $200,000, withheld by your employer regardless of filing status.

Your employer pays a matching 6.2% and 1.45% on top of your wages; that employer share does not reduce your paycheck. FICA has no standard deduction or brackets, which is why lower earners often pay more in FICA than in federal income tax.

Step 5: State and local income tax

Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — do not tax wage income. Of the rest, about fifteen use a flat rate and the others use graduated brackets. States usually start from your wages, subtract a standard deduction or personal exemptions, and apply their rates. Some cities and counties add their own tax — for example New York City, Philadelphia, many Ohio and Pennsylvania municipalities, and every Maryland county. Pick your state in the calculator or browse all states to see the exact rules.

Step 6: State payroll programs

A growing number of states fund disability insurance and paid family leave through employee payroll deductions — California SDI, New York SDI and PFL, New Jersey TDI and FLI, Washington PFML and WA Cares, Massachusetts PFML, and others. They appear as separate lines on your pay stub. See the full list with 2026 rates.

Step 7: Post-tax deductions

Roth 401(k) contributions, wage garnishments, union dues, some insurance premiums and charitable payroll deductions come out after taxes are calculated. They lower take-home pay without lowering your taxes.

Worked example: $60,000 salary, paid every two weeks

A single filer with no pre-tax deductions and a standard W-4 earning $60,000 in a state with no income tax (such as Texas) sees this on each biweekly paycheck:

Line	Per paycheck	Per year
Gross pay	$2,307.69	$60,000
Federal income tax	−$193.08	−$5,020
Social Security (6.2%)	−$143.08	−$3,720
Medicare (1.45%)	−$33.46	−$870
Take-home pay	$1,938.08	$50,390

The same salary in California adds $63.06 of state income tax and $30.00 of SDI per paycheck, cutting take-home to $1,845.02 (80.0% of gross versus 84.0% in Texas). Try your own numbers in the paycheck calculator.

Why your real paycheck may differ from an estimate

Your employer may use a different withholding method or round differently.
Your W-4 or state form contains entries a general calculator cannot know.
Benefits, garnishments, bonuses and local taxes change the total.
Social Security stops once your year-to-date wages pass the wage base, so high earners see a raise in take-home late in the year.
Rules change each year; always use the current tax year.

To compare, enter your gross pay and deductions from a recent pay stub into the calculator and see where the totals diverge.

Frequently asked questions

Why is my paycheck smaller than my salary divided by pay periods?

Because taxes and deductions come out before you are paid. A $60,000 salary is $2,307.69 gross every two weeks, but after federal tax, Social Security and Medicare a single filer in a no-income-tax state takes home about $1,938.08.

What is the difference between gross pay and net pay?

Gross pay is what you earn before anything is withheld. Net pay, also called take-home pay, is what lands in your bank account after taxes and deductions.

How much of my paycheck goes to taxes?

It depends on income, filing status, state and deductions. Federal income tax, Social Security (6.2%) and Medicare (1.45%) apply everywhere; most states add income tax. At $60,000 a single filer typically pays roughly 16–24% of gross in total taxes.

Do employers pay payroll taxes too?

Yes. Employers match Social Security (6.2%) and Medicare (1.45%) and pay unemployment taxes. That employer share is not deducted from your pay.

Is withholding the same as the tax I owe?

No. Withholding is an estimate collected during the year. Your actual tax is calculated on your return, and you receive a refund or owe the difference.