To calculate the federal tax on your paycheck, start with your gross pay, subtract pre-tax deductions like 401(k) and health premiums, annualize what’s left, then run that annual figure through the withholding allowance and rate schedule in IRS Publication 15-T for your filing status. Divide the annual tax back out across your pay periods, subtract any per-period credits from your W-4, and add any extra withholding you asked for. That is the federal income tax line on your paycheck. FICA (Social Security and Medicare) is calculated separately as a flat percentage of gross wages.
What You Need Before You Start
Three pieces of information drive the whole calculation: your gross pay for the period, your pay frequency, and your Form W-4 entries.
Pay frequency sets the divisor. Weekly is 52 periods a year, biweekly is 26, semi-monthly is 24, monthly is 12. That number is what you multiply by to annualize a single paycheck and divide by to get back to a per-check figure.
Your W-4 supplies the rest:1Internal Revenue Service. Topic No. 753, Form W-4, Employees Withholding Certificate
- Filing status (Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Surviving Spouse) picks the withholding allowance and rate schedule.2Internal Revenue Service. Filing Status
- Step 2 (multiple jobs) checked tells your employer to use a higher withholding rate and roughly halves the standard allowance.
- Step 3 is the total annual dollar value of credits you expect, such as $2,200 per qualifying child under 17 for 2026. It gets spread across your paychecks as a direct reduction in withholding.
- Step 4(a) adds other expected income (interest, dividends, side work) to what’s withheld.
- Step 4(b) subtracts extra deductions above the standard deduction, including the new above-the-line deductions the 2026 W-4’s Deductions Worksheet already accounts for.3Internal Revenue Service. Form W-4 Employees Withholding Certificate 2026
- Step 4(c) is a flat dollar amount added to every check.
If you never turned in a W-4, your employer must withhold as if you’re single with no adjustments, which usually pulls more than necessary.
Step 1: Subtract Pre-Tax Deductions
Certain payroll deductions come off gross pay before any tax math starts, so they reduce the wages fed into the withholding formula.
- 401(k) or 403(b) contributions, up to $24,500 for 2026. Workers age 50 and older can add $8,000; ages 60 through 63 qualify for an enhanced catch-up of $11,250.4Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Health insurance premiums paid through a Section 125 cafeteria plan.5Office of the Law Revision Counsel. 26 USC 125 – Cafeteria Plans
- HSA contributions through payroll, capped at $4,400 self-only or $8,750 family for 2026.6Internal Revenue Service. Expanded Availability of Health Savings Accounts Under the One, Big, Beautiful Bill Act
- Health care FSA contributions, capped at $3,400 for 2026.
What’s left after these deductions is your adjusted wage for the pay period. That is the figure the withholding formula uses.
Step 2: Run the Percentage Method
Payroll systems generally use the Percentage Method from Publication 15-T. The seven steps below are what your employer’s software is doing:7Internal Revenue Service. 2026 Publication 15-T, Federal Income Tax Withholding Methods
1. Start with the adjusted wage for the period. Subtract any Step 4(b) amount divided by pay periods, and add any Step 4(a) amount divided by pay periods.
2. Annualize it. Multiply by the number of pay periods in the year.
3. Subtract the withholding allowance for your filing status. For 2026, the standard allowance (Step 2 not checked) is $12,900 for Married Filing Jointly and $8,600 for every other status. If Step 2 is checked, the amounts are roughly halved. These figures sit below the actual standard deduction because the tables are calibrated to over-withhold slightly.
4. Apply the Publication 15-T rate schedule for your status. The rates run from 10% to 37%, but the bracket thresholds in Pub 15-T are set for withholding and differ from the annual filing brackets. Each rate applies only to income within its bracket; you add the layers.
5. Divide the annual withholding by the number of pay periods.
6. Subtract the per-period credit: total annual credits from Step 3 divided by pay periods.
7. Add any Step 4(c) extra withholding.
The result is the federal income tax on that paycheck.
Employers with wages up to roughly $100,000 a year can use the Wage Bracket Method instead: look up the row that matches the pay range for the filing status and pay frequency and read the withholding off the table. Above that income level, the Percentage Method is required. Same inputs produce the same answer either way.
A Worked Example
A single filer, paid biweekly, earning $60,000 a year, contributing 6% to a 401(k), and claiming one qualifying child on Step 3 ($2,200 annual credit). No Step 2 check, no Step 4 entries.
- Gross biweekly pay: $60,000 ÷ 26 = $2,307.69
- 401(k) at 6%: $2,307.69 × 0.06 = $138.46
- Adjusted biweekly wage: $2,307.69 − $138.46 = $2,169.23
- Annualized: $2,169.23 × 26 = $56,400
- Minus withholding allowance: $56,400 − $8,600 = $47,800
- Apply the Publication 15-T rate schedule to $47,800. For this income level, the layered result is roughly $5,400 to $5,500 of annual withholding.
- Per paycheck: about $5,450 ÷ 26 ≈ $209.62
- Minus the child credit spread across pay periods: $2,200 ÷ 26 = $84.62
- Federal income tax withheld: about $125.00 per paycheck
Your own number will move a little depending on the exact Pub 15-T thresholds, but the shape is the same: gross pay shrinks by pre-tax deductions, annualizes, runs through graduated withholding rates, then adjusts for credits.
Social Security and Medicare Come Out Separately
FICA taxes don’t touch the W-4 and don’t run through the Percentage Method. They’re a flat calculation on gross wages.
- Social Security: 6.2% of gross wages up to a 2026 wage base of $184,500. Once you cross that cap in a year, Social Security withholding stops.8Social Security Administration. Contribution and Benefit Base
- Medicare: 1.45% of all gross wages, no cap.
- Additional Medicare Tax: an extra 0.9% on wages above $200,000, withheld by the employer without any match.9Internal Revenue Service. Topic No. 560, Additional Medicare Tax
On a $70,000 salary, that’s $4,340 in Social Security (6.2%) and $1,015 in Medicare (1.45%) for the year, or about $206 per biweekly check. Filing status and W-4 entries don’t change these.
Bonuses and Other Supplemental Wages Follow Different Rules
Bonuses, commissions, and overtime lump sums are supplemental wages and don’t run through the paycheck formula the same way. Employers can:
- Withhold a flat 22% on the supplemental payment. This method is available only if income tax was withheld from your regular wages at some point in the current or prior calendar year.10eCFR. 26 CFR 31.3402(g)-1 – Supplemental Wage Payments
- Use the aggregate method: combine the bonus with your most recent regular paycheck, recalculate withholding on the total with the Percentage Method, and subtract the tax already withheld on the regular portion. Required when the flat method isn’t available.
Once your supplemental wages pass $1 million in a calendar year, a mandatory 37% rate applies to the excess and the employer has no choice.
Check Your Number and Avoid a Surprise in April
The IRS Tax Withholding Estimator at irs.gov/individuals/tax-withholding-estimator runs this whole calculation for you. Enter your income, current withholding, filing status, credits, and deductions, and it tells you whether you’re headed for a refund or a balance due and suggests specific W-4 changes.11Internal Revenue Service. Tax Withholding Estimator Ten minutes after a raise, a new job, a marriage, or a new dependent is usually enough to keep things in line.
If withholding falls short and you owe more than $1,000 at filing, the IRS may charge an underpayment penalty, which is effectively interest on what should have been paid through the year. For the first quarter of 2026, that rate is 7%.12Internal Revenue Service. Quarterly Interest Rates You avoid it by meeting any one of these safe harbors:13Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
- Owing less than $1,000 after withholding and credits.
- Withholding at least 90% of the current year’s total tax.
- Withholding at least 100% of last year’s total tax (110% if your AGI was above $150,000, or $75,000 if married filing separately).
Adjusting your W-4 mid-year is cheaper than fixing the shortfall on your return. If your income has moved since January, run the numbers again and file an updated form with your employer.