Paycheck Calculator
Frequently Asked Questions
How do paycheck taxes work?
When you receive a paycheck, your employer withholds various taxes before paying you. These include:
- Federal Income Tax: Based on your earnings, filing status, and W-4 allowances. Uses a progressive tax bracket system.
- State Income Tax: Varies by state. Some states like Texas, Florida, and Nevada have no state income tax.
- FICA Taxes: Social Security (6.2%) and Medicare (1.45%) are automatically withheld.
Your net (take-home) pay is what remains after all these deductions.
What is FICA and how is it calculated?
FICA stands for the Federal Insurance Contributions Act. It funds Social Security and Medicare programs. FICA consists of two parts:
- Social Security: 6.2% of your gross wages, up to the annual wage base limit ($168,600 in 2024). Your employer also pays 6.2%.
- Medicare: 1.45% of all your wages with no limit. An additional 0.9% Medicare tax applies to wages over $200,000 (single) or $250,000 (married filing jointly).
Combined, the standard FICA rate is 7.65% of your gross pay.
What is the difference between pre-tax and post-tax deductions?
Pre-tax deductions are taken from your paycheck before taxes are calculated. This reduces your taxable income, meaning you pay less in taxes. Common pre-tax deductions include:
- Traditional 401(k) contributions
- Health insurance premiums
- Health Savings Account (HSA) contributions
- Flexible Spending Account (FSA) contributions
Post-tax deductions are taken after taxes are calculated. These include Roth 401(k) contributions, life insurance premiums, and garnishments. Post-tax deductions don't reduce your current taxable income but may offer other benefits (like tax-free withdrawals in retirement for Roth accounts).
How do I read my pay stub?
A pay stub contains important information about your earnings and deductions:
- Gross Pay: Your total earnings before any deductions.
- Federal Withholding: Income tax withheld for the IRS.
- State/Local Tax: Income taxes for your state or locality.
- Social Security & Medicare: Your FICA contributions.
- Pre-Tax Deductions: 401(k), health insurance, etc.
- Post-Tax Deductions: Roth contributions, other withholdings.
- Net Pay: Your actual take-home amount.
- YTD (Year-to-Date): Cumulative totals for the calendar year.
Review your pay stub regularly to ensure accuracy and track your earnings and tax contributions throughout the year.