How Your Paycheck Is Calculated (2026)
Your paycheck is calculated by starting with your gross pay and subtracting four things: federal income tax, Social Security and Medicare (together called FICA), state income tax, and any pre-tax deductions like a 401(k). What is left is your take-home pay. To see the whole thing worked out for your salary and state, use the free paycheck calculator, which runs entirely in your browser so nothing you type is uploaded.
Quick answer: take-home pay = gross pay − federal income tax − Social Security (6.2%) − Medicare (1.45%) − state income tax − pre-tax deductions. For a $60,000 salary with no state income tax, that comes to about $50,390 a year, an effective tax rate near 16%.
Step 1: Start with gross pay
Gross pay is your full earnings before anything is withheld. If you are salaried, it is your annual salary. If you are paid hourly, it is your hourly rate times hours worked. The calculator estimates annual hourly pay as your rate times hours per week times 52 weeks. Every tax below is figured from this gross number, then your paycheck is whatever fraction of the year each pay period covers.
Step 2: Federal income tax
Federal income tax is progressive, meaning different slices of your income are taxed at different rates. First, the standard deduction is subtracted from your gross pay. For 2026 the standard deduction is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household. The amount left is your taxable income, and it runs up through the brackets below.
These are the 2026 federal brackets for a single filer used by the calculator:
| Rate | Taxable income (single) |
|---|---|
| 10% | $0 to $12,400 |
| 12% | $12,400 to $50,400 |
| 22% | $50,400 to $105,700 |
| 24% | $105,700 to $201,775 |
| 32% | $201,775 to $256,225 |
| 35% | $256,225 to $640,600 |
| 37% | Over $640,600 |
Only the income inside each band is taxed at that band's rate, so reaching a higher bracket never lowers your take-home pay on the dollars below it. Married-filing-jointly brackets are set at double these single thresholds in the calculator.
Step 3: Social Security and Medicare (FICA)
FICA is two flat payroll taxes taken from your wages. Social Security is 6.2% of your wages, but only up to the 2026 wage base of $184,500. Earnings above that are not subject to Social Security tax. Medicare is 1.45% of all your wages with no cap. High earners pay an additional Medicare tax of 0.9% on wages above $200,000 (single or head of household) or $250,000 (married filing jointly).
Unlike income tax, FICA is charged on your gross wages even if you contribute to a traditional 401(k). Putting money in a pre-tax retirement account lowers your income tax, but Social Security and Medicare still apply to those dollars. There is a fuller breakdown on the FICA explained page.
Step 4: State income tax
State income tax depends entirely on where you work. Rates range from a flat percentage in some states to progressive brackets in others. Nine states take no income tax on wages at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. In those states your paycheck skips state withholding entirely, though you still owe federal income tax, Social Security, and Medicare.
Everywhere else, the state applies its own standard deduction and rate schedule to your income. Some states also have local income taxes in certain cities or counties, which are not included in these estimates. You can pick your state in the calculator or open your state's dedicated page from the by-state list.
Step 5: Pre-tax and post-tax deductions
Pre-tax deductions come out of your pay before income tax is figured, which lowers your taxable income. Common examples are traditional 401(k) contributions, health savings account deposits, and many health insurance premiums. Because they reduce taxable income, they also reduce your federal and state income tax.
Post-tax deductions come out after taxes and do not lower your tax bill. A Roth 401(k) contribution is the classic example: you pay tax on the money first, then it goes into the account. In the calculator you can enter a 401(k) percentage and other annual pre-tax amounts to see how they change both your taxes and your take-home pay.
A worked example
Take a $60,000 salary, filed single, in a state with no income tax, paid every two weeks. Here is how the calculator gets from gross to net:
| Item | Annual amount |
|---|---|
| Gross pay | $60,000 |
| Federal income tax | $5,020 |
| Social Security (6.2%) | $3,720 |
| Medicare (1.45%) | $870 |
| State income tax | $0 |
| Take-home pay | $50,390 |
Total tax is $9,610, an effective rate of about 16%. Spread across 26 biweekly paychecks, a $2,307.69 gross check becomes roughly $1,938 in take-home pay. Add a state income tax or a 401(k) contribution and the numbers shift, which is exactly what the calculator lets you test.
See your own numbers: the free paycheck calculator applies all of the 2026 rates above for any salary, hourly wage, state, and pay frequency, and shows the split per paycheck and per year.
More guides
- Why is my paycheck smaller than my salary?
- What is FICA? Social Security & Medicare tax explained
- Paycheck calculator FAQ
- Take-home pay by state
This guide is general information, not tax, legal, or financial advice. Figures are 2026 estimates and exclude local taxes and most state-specific credits. Confirm important numbers with a tax professional.
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