🇺🇸 Federal Paycheck Calculator

Calculate your take-home pay after federal, state & local taxes

Updated for 2023 tax year on Dec 05, 2023

Paycheck calculators by state

United States federal paycheck calculation

All residents and citizens in the USA are subjected to income taxes. Residents and citizens are taxed on worldwide income (working overseas, etc.). In contrast, nonresidents are taxed only on income within the jurisdiction.

The 12-month period for income taxes begins on January 1st and ends on December 31st of the same calendar year.

The federal income tax rates differ from state income tax rates. Federal taxes are progressive (higher rates on higher income levels). At the same time, states have an advanced tax system or a flat tax rate on all income.

The income tax rate varies from state to state. Eight states are without an income tax, and one has no wage income tax.

It is also worth noting that the recent Tax Cuts and Jobs Act (TCJA) of 2017 made several significant changes to the individual income tax across the board. To understand the differences in detail, refer to this Investopedia article.

The above paycheck calculator is applicable for calculating paychecks of individuals who have an annual salary, hourly wage, or are seasonal workers or self-employed.

Calculate your paycheck in 6 steps

There are six main steps to work out your final paycheck.

Step 1 – Gross income

First, we need to determine your gross income. If you are salaried, your annual salary will be your gross income. If you are paid hourly, you must multiple the hours, days and weeks.

The following is the formula for both cases:

• Annual salary – Annual salary = Gross income
• Hourly wage – Hourly wage × Hours worked per day × Days worked per week × Weeks worked per year = Your weekly paycheck

Step 2 – Federal income tax liability

There are four substeps to take to work out your total federal taxes.

Step 2.1 – Gross income adjusted

The formula is:
Gross income − Pre-tax deductions = Gross income adjusted

This income is not your Adjusted Gross Income (AGI) but rather your gross income adjusted for specific pre-tax deductions relevant to FICA taxes.

Some of pre-tax contributions are:

• 401(k) plans
• FSA
• HSA
• Medical insurance
• Life insurance

For the breakdown of the various above-the-line deductions or adjustments, refer to this article from thebalance.com.

Step 2.2 – Federal taxable income

Now, you need to figure out your federal taxable income.

The formula is:
Gross income adjusted − Federal standard/itemized deductions = Federal taxable income

You can either take the standard deduction amount or itemize your deductions. If your itemized deductions are less than the standard deduction, claim the standard amount 🙂

Some of the deductions you can itemize are:

• Charitable donations
• Home mortgage interest

Exemptions have been eliminated from Federal income tax since the Tax Cuts and Jobs Act (TCJA) was implemented in 2018. However, some states still have exemptions in their income tax calculation.

You might be confused with deductions and exemptions, so the following is a quote from Zacks.com:
Tax deductions are items you claim to reduce your tax liability while exemptions refer to the people you claim to reduce tax liability, such as dependents.

Step 2.3 – Federal income tax liability

This step is straightforward. You need to understand which tax bracket you belong to based on your taxable income and filing status.

The formula is:
Federal taxable income × Federal income tax rate = Federal income tax liability

Your marital status and whether you have any dependents will determine your filing status.

For example, if you are single and have a child, you should file as ‘Head of Household’. Suppose you are married but prefer to file separately from your partner (highly inadvisable). In that case, you will file as ‘Married, Filing Separately’.

Refer to IRS to understand more.

Step 2.4 – Federal payroll tax liability

There is an additional tax (surprise!) before the final step. Federal Insurance Contributions Act (FICA) is the payroll tax taken directly from your paycheck. FICA consists of Social Security and Medicare. The self-employed are taxed twice as much as regular employees.

The formula is:
Gross income × Federal payroll tax rate = Federal payroll tax liability

Step 3 – State income tax liability

Like federal tax liability, there are a few substeps to work out your state tax liability.

Step 3.1 – State taxable income

You can use the federal AGI you calculated earlier.

The formula is:
Gross income adjusted − (State standard/itemized deductions + State exemptions) = State taxable income

Step 3.2 – State income tax liability

Some states have a flat rate, some don’t have income tax and some adopt progressive income tax rates. Depending on the state, your tax bracket may be based on your filing status.

The formula is:
State taxable income × State income tax rate = State income tax liability

Step 3.3 – State payroll tax liability

State payroll taxes are mainly State Unemployment Insurance (SUI), State Disability Insurance (SDI) and Paid Family and Medical Leave (PFML)

The formula is:
Gross income × State payroll tax rate = State payroll tax liability

Step 4 – Local income tax liability

Some cities or counties impose local income tax.

The formula is:
(Gross income or State taxable income) × Local income tax rate = Local income tax liability

Step 5 – Your net pay

After calculating your total tax liability, subtract deductions (pre and post-tax) and any withholdings (if applicable).

The formula is:
Gross income − (Total income tax liability + Total payroll tax liability + Total pre-tax deductions + Total post-tax deductions + Total withholdings) = Your net pay

Step 6 – Your paycheck

For the final step, divide your net pay by your pay frequency. The following is the formula for each pay frequency:

• Daily – Your net pay / Days worked per week / Weeks worked per year = Your daily paycheck
• Weekly – Your net pay / 52 = Your weekly paycheck
• Bi-weekly – Your net pay / 26 = Your bi-weekly paycheck
• Semi-monthly – Your net pay / 24 = Your semi-monthly paycheck
• Monthly – Your net pay / 12 = Your monthly paycheck
• Quarterly – Your net pay / 4 = Your quarterly paycheck
• Semi-annual – Your net pay / 2 = Your semi-annual paycheck
• Annual – Your net pay = Your annual paycheck

For visual explanations of the above steps, refer to YouTube videos from Ladder Up, MoneyCoach, or Edspira.

Federal Insurance Contributions Act (FICA)

Also known as ‘paycheck tax’ or ‘payroll tax’, these taxes are taken from your paycheck directly. They are used to fund social Security and Medicare.

For example, in the 2020 tax year, the Social Security tax is 6.2% for employees and 1.45% for the Medicare tax.
If your monthly paycheck is $6000, $372 goes to Social Security, and $87 goes to Medicare, leaving you with $6000 − $372 − $87 = $5541

Social Security

Medicare

Income tax brackets

Every year, IRS adjusts some tax provisions for inflation. Your federal tax bracket varies yearly, and you need to check the latest data before you do your tax return.

You can refer to Tax Foundation for the latest federal income tax brackets.

The income tax rate varies from state to state. Eight states don’t have an income tax, and one (New Hampshire) has no wage income tax.

Standard deduction

Also known as post-tax deductions, you can take the standard deduction amount or itemize your deductions. If your itemized deductions are less than the standard deduction, claim the standard amount :-).

Some of the deductions you can itemize are:

• Charitable donations
• Home mortgage interest

For a list of itemizable deductions, refer to Dough Roller’s ultimate list.

FAQs