πŸ‡ΊπŸ‡Έ US Federal Paycheck Calculator

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

Last updated on Aug 31 2021

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United States federal income tax

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

A fiscal year is different for the federal and state. A federal fiscal year is the 12-months period beginning October 01 and ending September 30 the following year. The fiscal year 2021 will starts on Oct 01 2020 and ends on Sep 30 2021. The state fiscal year is also 12 months but it differs from state to state. Some states follow the federal fiscal year, some states start on July 01 and end on Jun 30.

Similar to the fiscal year, federal income tax rates are different from each state. Federal taxes are progressive (higher rates on higher levels of income), while states have either a progressive tax system or a flat tax rate on all income.

The income tax rate varies from state to state. There are 8 states which don’t have income tax and 1 state (New Hampshire) that 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. If you want to understand the changes in detail, refer to this Investopedia article.

Calculate income tax in 5 steps

There are five main steps to work out your income tax (federal & state) liability or refunds. First, you need to determine your filing status to understand your tax bracket.

Step 1 – Filing status

There is 4 main filing status:

  • Single
  • Married, Filing Jointly or Widow(er)
  • Married, Filing Separately
  • Head of Household

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

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

Refer to IRS to understand more.

Step 2 – Adjusted gross income

The second step is to figure out your adjusted gross income.

The formula is:
Total annual income – Adjustments = Adjusted gross income

Income means money received for pretty much any reason such as wage, rental income, side hustle, unemployment benefits, etc. You just need to add them up to determine your annual income. If you’re paid hourly, you will need to multiple it with your total annual hours.

Adjustments are also known as above-the-line deductions.There are 2 types of deductions: above-the-line & post-tax (more in the next step).

Some of the adjustments are:

  • Student loan interest
  • Contributions to a retirement account (401k, IRA)
  • Health savings account deduction
  • Educator expenses
  • Moving expenses for a job
  • College tuition and fees

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

Step 3 – Taxable income

Now you need to figure out your taxable income.

The formula is:
Adjusted gross income – (Post-tax deductions + Exemptions) = Taxable income

For post-tax deductions, you can choose to either take the standard deduction amount or itemize your deductions. If your itemized deductions are less than the standard deduction, just claim the standard amount πŸ™‚

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. But 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 4 – Tax liability

This step is rather straight forward. You just need to understand which tax bracket you belong to based on your taxable income. If your filing status is ‘Married, Filing Jointly’ or ‘Widow(er)’, you need to combine your taxable income with your partner’s.

The formula to calculate tax liability:
Taxable income Γ— Tax rate = Tax liability

Step 5 – Owe money or refunds

Once you have worked out your tax liability, you need to understand whether it is more than your tax credits and withheld.

If your tax liability is more than your tax credits and withheld, then you need to pay IRS or your state the difference.
If your tax credits and withheld is more than your tax liability, then IRS or your state owes you the difference.

The formula for tax liability more than refunds:
Tax liability – (Credits + Withheld) = What you owe

The formula for tax liability less than refunds:
(Credits + Withheld) – Tax liability = Tax refunds

You need to do these steps separately for federal, state and local income taxes.

For visual explanations of the above steps, you can 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 and are used to fund social security and medicare.

For example, in the fiscal year 2020 Social Security tax is 6.2% for employee and 1.45% for 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

Fiscal year Employment status Gross income Rate
2021 Employer Up to $142,800 6.20%
Employee 6.20%
Self-employed 12.40%
2020 Employer Up to $137,700 6.20%
Employee 6.20%
Self-employed 12.40%

Medicare

Fiscal year Employment status Filing status Gross income Rate
2021
2020
Employer Single & Head of Household Up to $200,000 1.45%
Married Jointly Up to $250,000
Married Separately Up to $125,000
Single & Head of Household $200,000 and over 2.35%
Married Jointly $250,000 and over
Married Separately $125,000 and over
Employee Single & Head of Household Up to $200,000 1.45%
Married Jointly Up to $250,000
Married Separately Up to $125,000
Single & Head of Household $200,000 and over 2.35%
Married Jointly $250,000 and over
Married Separately $125,000 and over
Self-employed Single & Head of Household Up to $200,000 2.90%
Married Jointly Up to $250,000
Married Separately Up to $125,000
Single & Head of Household $200,000 and over 3.80%
Married Jointly $250,000 and over
Married Separately $125,000 and over

Income tax brackets

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

For the latest on federal income tax brackets, you can refer to Tax Foundation.

The income tax rate varies from state to state. There are 8 states which don’t have income tax and 1 state (New Hampshire) that has no wage income tax.

Fiscal year Filing status Taxable income Rate
2021 Single $0 – $9,950 10%
$9,951 – $40,525 12%
$40,526 – $86,375 22%
$86,376 – $164,925 24%
$164,926 – $209,425 32%
$209,426 – $523,600 35%
$523,601 and over 37%
Married, Filing Jointly or Widow(er) $0 – $19,900 10%
$19,901 – $81,050 12%
$81,051 – $171,050 22%
$172,751 – $329,850 24%
$329,851 – $418,850 32%
$418,851 – $628,300 35%
$628,301 and over 37%
Married, Filing Separately $0 – $9,950 10%
$9,951 – $40,525 12%
$40,526 – $86,375 22%
$86,376 – $164,925 24%
$164,926 – $209,425 32%
$209,426 – $314,150 35%
$314,151 and over 37%
Head of Household $0 – $14,200 10%
$14,201 – $54,200 12%
$54,201 – $86,350 22%
$86,351 – $164,900 24%
$164,901 – $209,400 32%
$209,401 – $523,600 35%
$523,601 and over 37%
2020 Single $0 – $9,875 10%
$9,876 – $40,125 12%
$40,126 – $85,525 22%
$85,526 – $163,300 24%
$163,301 – $207,350 32%
$207,351 – $518,400 35%
$518,401 and over 37%
Married, Filing Jointly or Widow(er) $0 – $19,750 10%
$19,751 – $80,250 12%
$80,251 – $171,050 22%
$171,051 – $326,600 24%
$326,601 – $414,700 32%
$414,701 – $622,050 35%
$622,051 and over 37%
Married, Filing Separately $0 – $9,875 10%
$9,876 – $40,125 12%
$40,126 – $85,525 22%
$85,526 – $163,300 24%
$163,301 – $207,350 32%
$207,351 – $311,025 35%
$311,026 and over 37%
Head of Household $0 – $14,100 10%
$14,101 – $53,700 12%
$53,701 – $85,500 22%
$85,501 – $163,300 24%
$163,301 – $207,350 32%
$207,351 – $518,400 35%
$518,401 and over 37%

Deductions

Also known as post-tax deductions, you can choose to either take the standard deduction amount or itemize your deductions. If your itemized deductions are less than the standard deduction, just claim the standard amount πŸ™‚

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.

Fiscal year Filing status Standard deduction amount
2021 Single $12,550
Married, Filing Jointly $25,100
Married, Filing Separately $12,550
Head of Household $18,800
2020 Single $12,200
Married, Filing Jointly $24,400
Married, Filing Separately $12,200
Head of Household $18,350

Earned Income Tax Credit (EITC)

EITC is calculated based on adjusted gross income. Its main purpose is to offsets federal payroll and income taxes for those with lower income. Some states do have EITC which is usually based on a percentage of federal EITC.

For more information, refer to the Center on Budget and Policy Priorities.

Fiscal year Filing status No. of child Maximum credit amount Comment
2021 Single
Married, Filing Separately
Head of Household
0 $538 Phase-in rate – 15.3%
Phase-in ends – $9,820
Phase-out begins – $11,610
Phase-out rate – 15.3%
Phase-out ends – $21,427
1 $3,584 Phase-in rate – 34%
Phase-in ends – $10,640
Phase-out begins – $19,520
Phase-out rate – 15.98%
Phase-out ends – $42,158
2 $5,920 Phase-in rate – 40%
Phase-in ends – $14,950
Phase-out begins – $19,520
Phase-out rate – 21.06%
Phase-out ends – $47,915
3 or more $6,660 Phase-in rate – 45%
Phase-in ends – $14,950
Phase-out begins – $19,520
Phase-out rate – 21.06%
Phase-out ends – $51,464
Married, Filing Jointly 0 $538 Phase-in rate – 15.3%
Phase-in ends – $9,820
Phase-out begins – $11,610
Phase-out rate – 15.3%
Phase-out ends – $21,427
1 $3,584 Phase-in rate – 34%
Phase-in ends – $10,640
Phase-out begins – $19,520
Phase-out rate – 15.98%
Phase-out ends – $42,158
2 $5,920 Phase-in rate – 40%
Phase-in ends – $14,950
Phase-out begins – $19,520
Phase-out rate – 21.06%
Phase-out ends – $47,915
3 or more $6,660 Phase-in rate – 45%
Phase-in ends – $14,950
Phase-out begins – $19,520
Phase-out rate – 21.06%
Phase-out ends – $51,464
2020 Single
Married, Filing Separately
Head of Household
0 $538 Phase-in rate – 7.65%
Phase-in ends – $7,030
Phase-out begins – $8,790
Phase-out rate – 7.65%
Phase-out ends – $15,820
1 $3,584 Phase-in rate – 34%
Phase-in ends – $10,540
Phase-out begins – $19,330
Phase-out rate – 15.98%
Phase-out ends – $41,756
2 $5,920 Phase-in rate – 40%
Phase-in ends – $14,800
Phase-out begins – $19,330
Phase-out rate – 21.06%
Phase-out ends – $47,440
3 or more $6,660 Phase-in rate – 45%
Phase-in ends – $14,800
Phase-out begins – $19,330
Phase-out rate – 21.06%
Phase-out ends – $50,954
Married, Filing Jointly 0 $538 Phase-in rate – 7.65%
Phase-in ends – $7,030
Phase-out begins – $14,680
Phase-out rate – 7.65%
Phase-out ends – $21,710
1 $3,584 Phase-in rate – 34%
Phase-in ends – $10,540
Phase-out begins – $25,220
Phase-out rate – 15.98%
Phase-out ends – $47,646
2 $5,920 Phase-in rate – 40%
Phase-in ends – $14,800
Phase-out begins – $25,220
Phase-out rate – 21.06%
Phase-out ends – $53,330
3 or more $6,660 Phase-in rate – 45%
Phase-in ends – $14,800
Phase-out begins – $25,220
Phase-out rate – 21.06%
Phase-out ends – $56,844

Child Tax Credit (CTC)

This is a ‘refundable’ credit, meaning you can get up a certain amount of money even if your tax bill is $0. The only catch is that you must claim the credit on your tax return to get it. Each state has different child tax credits.

For more information, refer to Tax Credits for Workers and Families.

Fiscal year Filing status Amount per dependent Refundable Comment
2021
2020
Single
Married, Filing Separately
Head of Household
$2,000 per child under 17 Up to $1,400 Phase-out begins at $200,000 and end at $240,000
Earned income threshold to qualify – $2500
Married, Filing Jointly Phase-out begins at $400,000 and end at $440,000
Earned income threshold to qualify – $2500

Credit for Other Dependents (ODC)

ODC is for taxpayers who have dependents who don’t qualify for the Child Tax Credit.

Each dependent must meet the following conditions:

  • age 17 or older.
  • have individual taxpayer identification numbers.
  • dependent’s parents or other qualifying relatives supported by the taxpayer
  • living with the taxpayer who isn’t related to the taxpayer

ODC is a federal only tax and does not have a state counterpart.

For more information, refer to IRS.

Fiscal year Filing status Amount per dependent Refundable
2021
2020
Any $500 per dependent No

FAQs

How do I figure out how much my paycheck will be?

Step 1: Total annual income – Adjustments = Adjusted gross income
Step 2: Adjusted gross income – (Post-tax deductions + Exemptions) = Taxable income
Step 3: Taxable income Γ— Tax rate = Tax liability
Step 4: Tax liability – (Credits + Withheld) = What you owe IRS

How much is a paycheck on 40000 salary?

For single filer, you will receive $2820.42 every month after federal tax liability. For married filed joinly with no dependent, the monthly paycheck is $2954.17 after federal tax liability.

How much is 75k a paycheck?

Paycheck after federal tax liability for single filer:

  • Monthly - $4981.25
  • Bi-weekly - $2299.04
  • Weekly - $1149.52