Salary and Paycheck Calculator
Paychecks, Taxes, and How to Calculate Take-Home Pay
A paycheck represents your earned income, but the amount you take home is often lower than your gross salary due to taxes and deductions. Understanding how pay, tax brackets, and deductions work can help you plan your finances effectively.
How Paychecks Are Calculated
Gross Pay – Your total earnings before any deductions.
Hourly employees: Hourly Rate × Hours Worked
Salaried employees: Annual Salary ÷ Number of Pay Periods
Deductions & Taxes – These reduce take-home pay and include:
Federal Income Tax – Based on income and tax brackets.
State & Local Taxes – Varies by location.
FICA Taxes – Social Security (6.2%) + Medicare (1.45%).
Retirement Contributions (401k, IRA) – Pre-tax deductions.
Health Insurance & Other Benefits – Deducted from gross pay.
Net Pay (Take-Home Pay) – What remains after all deductions.
Understanding Tax Brackets & Tiers
The U.S. tax system uses a progressive tax structure, meaning higher income is taxed at higher rates. As of 2024, federal income tax brackets are:
10%: Up to $11,000 (single) / $22,000 (married)
12%: $11,001 – $44,725
22%: $44,726 – $95,375
24%: $95,376 – $182,100
32%: $182,101 – $231,250
35%: $231,251 – $578,125
37%: Over $578,126
Tax brackets apply progressively, meaning only the portion of income within each tier is taxed at that rate, not the entire income.
Example Paycheck Calculation
For a $60,000 salary (before deductions):
Federal Tax: Taxed across multiple brackets (approx. $6,500 - $8,000).
FICA Taxes: 7.65% (~$4,590).
State Tax: Varies (0–10% depending on location).
Retirement & Benefits: Pre-tax deductions reduce taxable income.
Net Pay: After all deductions, actual take-home pay may be $45,000 - $48,000 per year.
Using a Paycheck Calculator
Instead of manually calculating pay, online paycheck calculators can estimate your net pay after taxes and deductions. Understanding your tax liabilities, deductions, and effective tax rate helps with budgeting, saving, and financial planning.