CalculateHow to Calculate Your Take-Home Pay
Gross salary isn't what lands in your account. Here's every deduction in between, using 2026 U.S. federal figures.
Gross pay isn't what lands in your account
Your salary or hourly rate determines your gross pay — the number on your offer letter. What actually reaches your bank account, your net or take-home pay, is gross pay minus several separate deductions, some mandatory and some optional. Understanding each one is the difference between being surprised by a paycheck and predicting it accurately.
Federal income tax withholding
Your employer withholds an estimate of your federal income tax liability from every paycheck, based on the filing status and adjustments you specify on Form W-4 and the IRS withholding tables. It's an estimate, not your final bill — over- or under-withholding gets reconciled when you file your return, which is why a big refund or a surprise tax bill both usually trace back to how W-4 elections were set.
FICA: Social Security and Medicare
FICA is a fixed pair of payroll taxes, separate from income tax withholding: 6.2% for Social Security and 1.45% for Medicare, 7.65% combined on the employee side. Social Security tax has an annual wage cap — for 2026, it's $184,500, meaning any wages above that in a calendar year aren't subject to the 6.2% Social Security tax. Medicare tax has no cap at all, and above $200,000 in wages ($250,000 for married couples filing jointly), an Additional Medicare Tax of 0.9% kicks in on top of the standard 1.45%.
Pre-tax deductions change the math before tax is even calculated
Contributions to a traditional 401(k), health insurance premiums, HSA and FSA contributions, and some commuter benefits are typically deducted from your pay before taxable wages are calculated — not after. That means two people earning the identical salary can have meaningfully different take-home pay if one contributes more to a 401(k) or has different health coverage: the contribution itself lowers the wages that income tax and, in some cases, other taxes are calculated on.
Marginal vs. effective tax rate
The U.S. federal system is progressive: each portion of your income is taxed at the rate for the bracket it falls into, not your entire income at your top rate. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married filing jointly, and brackets start at 10% before stepping up through 12%, 22%, 24%, 32%, 35%, and 37%. Someone with $60,000 in taxable income and a 22% marginal rate doesn't pay 22% on all $60,000 — they pay 10% on the first slice, 12% on the next, and only 22% on the portion that actually falls in that top bracket. Their effective rate — total tax divided by total income — ends up well below 22%.
State and local taxes: the part that varies by ZIP code
On top of federal withholding, most states apply their own income tax, withheld the same way federal tax is. A handful of states — including Texas, Florida, Washington, Nevada, Tennessee, Wyoming, South Dakota, and Alaska — don't tax wage income at the state level at all, which is one reason take-home pay for the same salary can differ noticeably depending on where you live and work.
Frequently asked questions
Why is my take-home pay different from a coworker's at the same salary?+
Differences in filing status, W-4 elections, state of residence, and pre-tax deductions like 401(k) contributions or health plan choice can all produce different take-home pay from an identical gross salary.
Does contributing to a 401(k) really lower my taxes?+
For a traditional (pre-tax) 401(k), yes — your contribution is subtracted from taxable wages before federal (and often state) income tax is calculated, lowering your tax bill in the year you contribute. A Roth 401(k) works differently: contributions are taxed now, but qualified withdrawals in retirement are tax-free.
What happens if too much or too little tax is withheld?+
Too much withholding results in a refund when you file; too little results in a balance due, and potentially an underpayment penalty if the gap is large enough. Adjusting your W-4 is the usual way to correct either direction going forward.
Is take-home pay the same as disposable income?+
Not quite — take-home pay is what's left after taxes and payroll deductions. Disposable income is a broader concept that can also account for other fixed obligations, though the terms are often used loosely and interchangeably.
Sources
Disclaimer: This guide is for general educational purposes and does not constitute financial, tax, legal or medical advice. Rules, rates and thresholds change over time — confirm current figures with the official sources linked above or a qualified professional before making a decision.