Paycheck FAQ

The calculator uses published 2026 federal brackets, the Social Security wage base, Medicare rates, and each state's official tax structure to produce a close estimate. It doesn't replace advice from a CPA — allowances, credits, and voluntary benefits will fine-tune your actual withholding.

Nine states have no wage income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire fully repealed its Interest & Dividends Tax effective 2026.

Marginal rate is the rate on your last dollar of income. Effective rate is total tax divided by total income. In a progressive system, effective is always lower than marginal because lower brackets tax the first dollars less.

Traditional 401(k) contributions come out of your paycheck pre-tax — they reduce federal taxable wages (and state wages in most states) but not FICA. Roth 401(k) contributions are post-tax and don't reduce current taxable income.

Employers withhold as if each paycheck represents an annualized run rate, so a partial first pay period sometimes withholds proportionally more. It also might not yet reflect W-4 adjustments or benefit deductions that started mid-cycle.

Bonuses are taxed at the same rates as regular income, but employers usually withhold using the IRS 22% supplemental wage rate. Any over-withholding is refunded when you file.

You may need to file a resident return in your home state and a non-resident return in the work state — with a credit for taxes paid to the other state — unless the two have a reciprocity agreement.

FICA is a shorthand for Social Security (6.2% up to $184,500) plus Medicare (1.45%). Employers match your FICA contributions dollar-for-dollar.

An extra 0.9% Medicare tax on wages over $200,000 for single filers ($250,000 for married filing jointly). Employers begin withholding it the pay period you cross $200,000 regardless of filing status.

No. 1099 workers pay 'self-employment tax' — both the employee and employer halves of FICA (15.3% combined) — plus federal and state income tax. They typically make quarterly estimated payments.

The federal minimum wage is $7.25/hr and has been unchanged since 2009. Most states set higher local floors — for example, DC ($17.50), Washington ($16.66), and California ($16.50).

Overtime pay is taxed exactly like regular pay. There is no special overtime tax rate — the reason overtime paychecks feel highly taxed is that the temporary income bump can push withholding tables into higher bands, later reconciled at tax time.

For 2026: $16,100 for single filers, $30,000 for married filing jointly, and $22,500 for head of household. It's automatically applied unless you itemize on Form 1040 Schedule A.

Seven marginal brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Each bracket's dollar thresholds vary by filing status — see our Federal Tax Guide for the full table.

Update your W-4 after any major life change: marriage, divorce, a new child, buying a home, starting or stopping a second job, or a big salary change. Also update it if last year you owed more than $1,000 or received a large refund.

A deduction taken from gross pay before federal (and usually state) income tax is calculated — such as traditional 401(k), Section 125 health premiums, HSA, and FSA. It lowers your taxable wages.

Pay frequency is set by your employer's payroll cycle (weekly, bi-weekly, semi-monthly, or monthly). You can't change it individually, but total annual pay and total taxes are the same regardless of frequency.

Take-home pay (net pay) is what's actually deposited to your account after all taxes and deductions. Our calculator computes it by subtracting federal, FICA, state, local taxes, and any pre/post-tax deductions from gross pay.

Employer-sponsored health premiums under a Section 125 cafeteria plan are pre-tax — they reduce federal income tax, FICA, and (in most states) state tax. Non-cafeteria plans reduce only federal and state income tax.

A W-2 is issued to employees with taxes withheld throughout the year. A 1099-NEC is issued to independent contractors who receive gross pay with no withholding — the contractor is responsible for self-employment tax and quarterly estimates.

Usually the state where you physically perform the work is where state income tax is owed, but many states have special 'convenience of employer' rules (e.g., New York) that tax remote workers based on their employer's location. Check both states' rules.

A Section 125 cafeteria plan is an employer-sponsored benefit menu (health, dental, vision, HSA, FSA) that lets you pay premiums with pre-tax dollars, reducing income tax and FICA on those amounts.

Non-qualified stock options (NSOs) and RSUs are treated as supplemental wages and typically withheld at the flat 22% federal rate. ISOs have different rules and may trigger AMT — consult a CPA.

The EITC is a refundable credit for low- and moderate-income workers claimed on your annual return, not on your paycheck. Withholding is unaffected — you receive it as part of your refund.

Any over-withholding is refunded when you file your annual tax return. To reduce withholding going forward, update your W-4 — add deductions on line 4(b) or reduce dependents in Step 3 if applicable.

Yes. Federal income tax and FICA apply to all U.S. workers regardless of state. Only state-level income tax is skipped in the nine no-income-tax states.

Imputed income is the value of non-cash benefits (like employer-paid life insurance over $50,000 or personal use of a company car) that must be added to your W-2 taxable wages.

6.2% of gross wages until you cross the annual wage base — $184,500 in 2026. Above that, no more Social Security is withheld for the year, though Medicare (1.45%) continues.