How to Calculate Your Take Home Pay After Federal and State Taxes

What gets deducted from your paycheck (and in what order)

Your employer deducts money from your gross pay in a specific sequence. Understanding this order helps you predict your net pay and identify where your money goes each pay period.

Step 1: Pre-tax deductions come out first

Before any taxes are calculated, your employer subtracts pre-tax deductions like traditional 401(k) contributions, health insurance premiums, and HSA contributions. These reduce your taxable income, which means you pay less in federal and state taxes.

For example, if you earn $75,000 and contribute $6,000 annually to a traditional 401(k), your taxable income drops to $69,000. You still contribute the full $6,000 to retirement, but you only "feel" about $4,400 of it in reduced take home pay because the tax savings cover the rest.

Step 2: Federal income tax (based on brackets)

The US uses a progressive tax system, meaning different portions of your income are taxed at different rates. For 2024, a single filer pays:

• 10% on the first $11,600
• 12% on income from $11,601 to $47,150
• 22% on income from $47,151 to $100,525
• 24% on income from $100,526 to $191,950

Your tax is calculated after subtracting the standard deduction ($14,600 for single filers in 2024). The IRS Tax Withholding Estimator can help you dial in your W-4 so your withholding matches your actual liability.

Step 3: FICA taxes (Social Security and Medicare)

These payroll taxes fund Social Security and Medicare programs. Every worker pays them regardless of filing status or deductions:

• Social Security: 6.2% on income up to the wage base limit ($168,600 in 2024, per the SSA contribution schedule)
• Medicare: 1.45% on all income, plus an additional 0.9% on income above $200,000 for single filers

Combined FICA is 7.65% for most workers. Your employer pays a matching 7.65%, but that does not appear on your pay stub.

Step 4: State and local income tax

This is the variable that creates the largest differences in take home pay across the country. Nine states charge no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming). At the other end, California's top rate reaches 13.3% and New York City adds a local tax on top of the state rate.

The Tax Foundation's state tax data provides a comprehensive comparison of rates across all 50 states.

How different variables change your take home pay

Small changes in your tax inputs can shift your net pay by hundreds of dollars per month. Here are the variables with the biggest impact:

• Filing status: Married filing jointly nearly doubles your standard deduction ($29,200 vs. $14,600), which can reduce federal tax by $1,500 to $3,000 annually at moderate income levels
• State of residence: Moving from California to Texas on a $100,000 salary increases annual take home pay by approximately $5,000 to $6,000
• 401(k) contributions: Each dollar contributed pre-tax reduces your tax bill by your marginal rate, making the "cost" of saving for retirement lower than the contribution amount
• W-4 adjustments: Claiming additional withholding reduces each paycheck but avoids a year-end tax bill; under-withholding increases paychecks but may result in a balance due at filing

Use our tax breakdown tool to see exactly how each variable affects your bottom line, or compare two salary offers with our salary to hourly converter.

Common reasons your paycheck looks wrong

If your take home pay does not match your expectations, check these common causes:

1. Bonus withholding. Bonuses are often withheld at a flat 22% federal rate (or 37% above $1 million), which is higher than many workers' effective rate. The difference is reconciled when you file your return.
2. Mid-year W-4 changes. If you adjusted your W-4 partway through the year, your employer recalculates withholding for the remaining pay periods, which can cause temporary over- or under-withholding.
3. Benefits enrollment. A new health insurance plan, increased HSA contributions, or employer-sponsored life insurance premiums all reduce net pay. Check your benefits summary for recent changes.
4. State reciprocity. Some states have reciprocal tax agreements. If you live in one state and work in another, your withholding might be split or applied only to your resident state.