How to Calculate Paycheck Taxes: FICA, Federal, and State

To calculate paycheck taxes, start with your gross pay, subtract any pre-tax deductions to find the correct base for each tax, apply the flat 6.2% Social Security and 1.45% Medicare rates, look up your federal income tax withholding using the IRS tables tied to your W-4, subtract state and local income tax if your jurisdiction has one, then subtract any post-tax deductions. The gap between gross and net can reach 25% to 35% of your earnings depending on income and filing status, and the arithmetic works the same whether you are checking a pay stub or estimating a future paycheck.

What You Need Before You Start

Three pieces of information: your gross pay for the period, your pay frequency, and your current Form W-4.

Gross pay is everything you earned before deductions. Hourly workers multiply their rate by hours worked, including overtime. Salaried workers divide annual salary by the number of pay periods: 26 for biweekly, 24 for semimonthly.

Your W-4 tells your employer how much federal income tax to withhold based on filing status, other jobs, dependent credits, and any extra amount you request.¹ If you don’t remember what you filed, ask HR or check your payroll portal.

Some workers can claim complete exemption from federal income tax withholding, but only if they owed zero federal income tax last year and expect to owe zero again.² The exemption expires every February 15 and must be renewed. Claiming exempt when you don’t qualify can trigger a $500 civil penalty.³

Social Security and Medicare (FICA)

These two taxes come off every paycheck at flat rates. Filing status and dependents don’t change them.

Social Security: 6.2% of wages, up to an annual wage cap of $184,500 in 2026. Once year-to-date earnings hit that ceiling, Social Security withholding stops for the rest of the year.⁴
Medicare: 1.45% of all wages, no cap.⁵
Additional Medicare Tax: An extra 0.9% once your wages with a single employer exceed $200,000 in the calendar year. Withholding begins automatically at that threshold.⁶

Your employer pays a matching 6.2% and 1.45% out of its own pocket, so those amounts do not appear on your stub. There is no employer match on the 0.9% add-on.

One catch on the Additional Medicare Tax: the $200,000 withholding trigger applies to everyone, but the actual liability threshold at filing is $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for other filers.⁶ Dual-income couples can owe additional tax at filing time even when neither employer withheld any.

Federal Income Tax Withholding

Federal income tax is progressive. Each rate applies only to the slice of taxable income within its bracket, not to your entire income. For 2026 the seven brackets run from 10% to 37%.⁷

2026 Brackets for Single and Married Filing Jointly

10%: up to $12,400 single / $24,800 MFJ
12%: over $12,400 / $24,800
22%: over $50,400 / $100,800
24%: over $105,700 / $211,400
32%: over $201,775 / $403,550
35%: over $256,225 / $512,450
37%: over $640,600 / $768,700

Brackets apply to taxable income, meaning your earnings after the standard deduction and any pre-tax adjustments. The 2026 standard deduction is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household.⁷

How Employers Turn That Into a Withholding Amount

Employers use IRS Publication 15-T, which provides two methods.⁸ The wage bracket method is a lookup table by pay range and filing status. The percentage method annualizes your pay for the period, applies the bracket rates, then divides the result back down to one paycheck. Both methods pull in W-4 entries: the Step 2 multiple-jobs checkbox, dependent credits from Step 3, and other adjustments from Step 4.

To check the math yourself, walk through the percentage method: take gross pay, subtract pre-tax items that reduce income tax, annualize, subtract the standard deduction that matches your W-4, apply the brackets, then divide back to a single pay period.

Pre-Tax vs. Post-Tax Deductions

Deductions matter for the calculation because they change the base that each tax is applied to. Two deductions of the same dollar amount can produce very different tax results.

Pre-Tax

Pre-tax deductions come out before some or all taxes are computed. Common examples include traditional 401(k) contributions, health insurance premiums, flexible spending accounts, and health savings account contributions. They are not treated identically:

Health insurance premiums, FSA, and HSA contributions paid through a Section 125 cafeteria plan are generally exempt from both federal income tax and FICA.⁹
Traditional 401(k) contributions reduce federal income tax withholding but remain subject to Social Security and Medicare.¹⁰

Practical effect: FICA is calculated on gross pay minus cafeteria plan items, while federal income tax is calculated on gross pay minus cafeteria plan items and 401(k) deferrals.

Post-Tax

Post-tax deductions come out after taxes are computed and do not reduce withholding. Roth 401(k) contributions are the most common example.¹⁰ Others include union dues, charitable payroll giving, supplemental life insurance, and wage garnishments.

Calculating a Paycheck From Start to Finish

Here is a worked example: a single filer earning $60,000 per year, paid biweekly (26 pay periods), contributing $200 per paycheck to a traditional 401(k) and $100 to health insurance through a cafeteria plan.

Step 1. Gross pay for the period. $60,000 ÷ 26 = $2,307.69.

Step 2. FICA-taxable wages. Subtract cafeteria plan deductions: $2,307.69 − $100 = $2,207.69. The 401(k) deferral stays in this base.

Step 3. Social Security and Medicare. $2,207.69 × 6.2% = $136.88 Social Security. $2,207.69 × 1.45% = $32.01 Medicare.⁵

Step 4. Federal income tax base. Subtract all pre-tax deductions from gross: $2,307.69 − $100 − $200 = $2,007.69. Your employer applies the Publication 15-T tables to this figure using your W-4 filing status and entries to arrive at the actual withholding amount.⁸

Step 5. State and local income tax. If your state or locality withholds, that amount comes out next based on your state withholding form and your state’s tables.

Step 6. Post-tax deductions. Subtract Roth contributions, supplemental insurance, garnishments, and anything else that runs after taxes.

Step 7. Net pay. What remains lands in your bank account. On these inputs, net pay lands roughly in the $1,700–$1,800 range depending on state tax and W-4 specifics.

Bonuses, Commissions, and Tips

Supplemental wages follow different rules. Bonuses, commissions, and severance can be withheld at a flat 22% for federal income tax if total supplemental payments for the year stay at or under $1 million. Anything above $1 million in supplemental wages is withheld at 37%.¹¹ Social Security and Medicare still apply at the normal rates.

Tips of $20 or more in a calendar month must be reported to your employer in writing by the 10th of the following month, and your employer then withholds FICA and income tax on them like regular wages.¹² Mandatory service charges are not tips; they are regular wages.

State and Local Income Tax

There is no single formula. Nine states impose no income tax at all. The rest use either a flat rate or a progressive bracket structure with rates below the federal ones, and some cities and counties add a local tax that may be based on where you work rather than where you live. Your pay stub shows these amounts on their own lines. If you moved or started working remotely from a different state, confirm your employer is withholding for the right jurisdiction.

Checking Your Math and Fixing Problems

Run your own numbers against a real pay stub every few months, and always after a raise, a W-4 change, or the first paycheck of a new year. Frequent issues:

Social Security withholding not stopping after you cross $184,500 in year-to-date wages.⁴
Wrong filing status on file, most often single when you filed married. Ask for a copy of your W-4 to verify.
A stale W-4 after marriage, divorce, a new child, or a second job. File a new one at the time of the change.
Year-over-year swings driven by inflation-adjusted brackets. Employers switch to the new tables in January.⁷

If you consistently owe a large balance or receive a large refund, your withholding is off. The free Tax Withholding Estimator at irs.gov walks through income, deductions, and credits and suggests specific W-4 changes to bring withholding closer to actual liability.

1
Office of the Law Revision Counsel. 26 USC 3402 Income Tax Collected at Source
2
Internal Revenue Service. Employee’s Withholding Certificate – Form W-4
3
eCFR. 26 CFR 31.6682-1 False Information With Respect to Withholding
4
Social Security Administration. Contribution and Benefit Base
5
Office of the Law Revision Counsel. 26 USC 3101 Rate of Tax
6
Internal Revenue Service. Topic No. 560 Additional Medicare Tax
7
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
8
Internal Revenue Service. Publication 15-T (2026) Federal Income Tax Withholding Methods
9
Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans
10
Internal Revenue Service. Are Retirement Plan Contributions Subject to Withholding
11
Internal Revenue Service. Publication 15 (2026) (Circular E) Employer’s Tax Guide
12
Internal Revenue Service. Topic No. 761 Tips Withholding and Reporting