By Thomas M., Registered Investment Adviser (South Carolina) · Updated September 29, 2026
This page explains how we calculate take-home pay so you can judge the results for yourself.
1. Gross pay
Salary is used as entered. For hourly pay we multiply your hourly rate by regular hours, add overtime at 1.5× (or your multiplier), and annualise over 52 weeks.
2. Pre-tax deductions
Traditional 401(k), HSA, and Section 125 health premiums reduce income-tax wages. HSA and Section 125 amounts also reduce FICA wages; 401(k) contributions do not. A few states and cities do not follow the federal treatment (for example Pennsylvania and New Jersey on 401(k) deferrals, California and New Jersey on HSAs, and most Ohio cities); we model those exceptions.
3. Federal income tax
We use the Annual Percentage Method for automated payroll systems from IRS Publication 15-T (2026), Worksheet 1A, for Form W-4 (2020 or later): annualise wages, add Step 4(a) other income, subtract Step 4(b) deductions and the standard-deduction adjustment (unless the Step 2 box is checked), look up the tentative withholding in the Standard or Step-2-Checkbox schedule, subtract Step 3 credits, and add Step 4(c) extra withholding. The tables in our code are checked by a program that confirms each base amount equals the cumulative tax of the rows before it, and that the thresholds match the statutory brackets.
4. Social Security and Medicare
Social Security is 6.2% of FICA wages up to the 2026 wage base of $184,500. Medicare is 1.45% of all FICA wages, plus 0.9% on wages above $200,000.
5. State income tax
We annualise state taxable wages, subtract the state's standard deduction and personal exemption, apply the state's brackets, then subtract personal and dependent credits and add any surtax (such as California's 1% Mental Health Services Tax over $1 million). This is an estimate: some states publish their own withholding formulas that differ slightly from a full-year calculation.
6. Local taxes and payroll programs
Where we have modelled them — Maryland counties, New York City and Yonkers, several Pennsylvania, Ohio, Michigan, Missouri and Indiana localities — local tax is added; anywhere else you can enter your own local rate. State payroll programs (California SDI, New York SDI and PFL, New Jersey TDI/FLI, Washington PFML, Massachusetts PFML and others) are applied with their wage bases and caps.
7. What we do not model
Bonus withholding is modelled only in the bonus tax calculator (flat 22% / aggregate federal method, incremental FICA, and state tax estimated at your marginal rate); states that use their own flat supplemental rate are not modelled separately.
Connecticut's exemption phase-out and Utah's credit phase-out.
Separate head-of-household schedules in some states — where a state has one, we approximate it with the single-filer schedule.
Itemised deductions, tax credits other than the child credit at withholding, and year-end tax-return outcomes.
Employer-specific benefits, garnishments or pre-tax commuter benefits.
8. Data review status
Federal figures are taken from IRS publications. State income-tax rates, brackets and standard deductions are checked against each jurisdiction's own 2026 documents — a revenue agency withholding formula, rate schedule, instruction booklet or the enacted statute — and the Tax Foundation's 2026 compilation is used only as a cross-check. Payroll-program and local rates come from official agency pages where reachable (for example New Jersey, Rhode Island, Colorado, Oregon, Washington, Maine, Minnesota, Philadelphia, Toledo, Columbus, Cincinnati and New York City); Maryland county rates come directly from the Comptroller of Maryland's 2026 withholding guide, and Indiana county rates from the Indiana Department of Revenue's Departmental Notice #1.
Status: 50 of 51 jurisdictions are verified against an official document; the rest are listed as pending below and are kept out of search results until confirmed. This log is also shown on each state page.
We re-review federal and state figures each January when new tax tables take effect, and mid-year when a state changes a rate or a minimum wage. Every page shows the date it was last reviewed.
