Federal income tax uses a progressive bracket system. You do not pay the same rate on all your income.

Different portions of your income are taxed at different rates. Only the income within each bracket is taxed at that bracket's rate.

For example, if you are single and earn $80,000 in 2026:

• 10 percent on the first $11,925

• 12 percent on income from $11,926 to $48,475

• 22 percent only on income above $48,475 up to $80,000

Your effective tax rate is much lower than 22 percent — usually around 12 to 14 percent.

Our calculator applies these brackets automatically. Try it above to see your exact federal tax.

Gross pay is your total earnings before any deductions. This is your salary or hourly wage multiplied by hours worked.

Net pay is your take-home pay after all deductions. This includes federal tax, state tax, Social Security, Medicare, 401(k), health insurance, and other deductions.

For most workers, net pay is between 70 and 80 percent of gross pay. The exact percentage depends on your income, your state, and your deductions.

Use our calculator above to see your exact gross to net breakdown.

Nine states have no state income tax on wages:

• Texas

• Florida

• Washington

• Nevada

• Wyoming

• South Dakota

• Tennessee

• New Hampshire

• Alaska

New Hampshire and Tennessee tax only interest and dividend income, not wages. The other seven states tax no income at all.

If you work in these states, you pay zero state income tax. Your only tax obligations are federal taxes, Social Security, and Medicare.

Use our calculator above to see how much you save by living in a no-tax state.

Pre-tax deductions like 401(k) contributions, health insurance premiums, and HSA contributions are taken out of your paycheck before taxes are calculated. This reduces your taxable income.

When your taxable income goes down, you pay less in federal and state taxes.

Example: If you earn $65,000 and contribute $5,000 to your 401(k), you are only taxed on $60,000. If you are in the 22 percent tax bracket, this saves you approximately $1,100 in federal taxes.

The actual hit to your paycheck is much smaller than the contribution amount because of these tax savings.

Use our calculator above to see how pre-tax deductions affect your take-home pay.

There are several reasons why your actual paycheck might be different:

• Local or city taxes not included in our calculator (like New York City or Philadelphia)

• Employer-specific benefit deductions we do not have listed

• Bonus or overtime pay that changes your withholding

• Mid-year changes to your W-4 or benefit elections

• State-specific calculation methods that vary

Use our calculator as an estimate. Compare it to your pay stub. If there is a large difference, check your W-4 form with your employer.

FICA stands for the Federal Insurance Contributions Act. This tax funds Social Security and Medicare.

• Social Security: You pay 6.2 percent of your gross pay. This tax only applies to the first $176,100 you earn in 2026. Once you earn more than that, the Social Security tax stops for the rest of the year.

• Medicare: You pay 1.45 percent of all your gross pay. There is no income limit for Medicare tax. If you earn over $200,000 as a single filer or $250,000 as a married filer, you pay an additional 0.9 percent Medicare surtax.

Together, Social Security and Medicare take 7.65 percent of your paycheck. Your employer pays another 7.65 percent on your behalf.

The standard deduction for 2026 is:

• $15,000 for single filers

• $30,000 for married couples filing jointly

• $22,500 for heads of household

The standard deduction reduces your taxable income. You do not need to itemize anything to claim it. Most taxpayers take the standard deduction because it is simpler than itemizing deductions like mortgage interest or charitable donations.

The W-4 form tells your employer how much federal income tax to withhold from your paycheck.

Step 1: Enter your personal information including name, address, and Social Security number.

Step 2: Indicate if you have multiple jobs or a working spouse. If yes, use the online IRS estimator or check the box.

Step 3: Claim dependents. Each child under 17 gives you a $2,000 credit. Enter the total on line 3.

Step 4: Add any other adjustments. This includes other income, deductions, or extra withholding you want taken out.

Step 5: Sign and date the form. Give it to your employer.

Update your W-4 within 30 days of any major life change like marriage, divorce, or having a child.

Overtime pay is added to your regular income and taxed at your normal marginal tax rate. Overtime is not taxed at a higher rate.

However, more tax is withheld from overtime pay because the withholding system assumes you earn that amount every paycheck. If too much is withheld, you get the difference back as a refund when you file your taxes.

Do not turn down overtime because you think taxes will take it all. You always keep more than you pay in taxes.

In 2026, you pay Social Security tax on the first $176,100 of your earnings. This is called the wage base limit.

Once you earn more than $176,100 in a calendar year, the 6.2 percent Social Security tax stops for the rest of the year. Your paychecks become larger after you reach this limit.

There is no wage base limit for Medicare tax. You pay 1.45 percent on all your earnings, plus an additional 0.9 percent if you earn over $200,000 as a single filer.

Pre-tax deductions are taken out before taxes are calculated. They reduce your taxable income, so you pay less in federal and state taxes. Examples include 401(k), health insurance, and HSA.

Post-tax deductions are taken out after taxes are calculated. They do not reduce your taxable income. Examples include Roth 401(k) and wage garnishments.

Pre-tax deductions are usually better because they lower your tax bill immediately. Roth accounts have the advantage of tax-free withdrawals in retirement.

At minimum, contribute enough to get your full employer match. If your employer matches 50 percent of your contributions up to 6 percent of your salary, that is free money. Do not leave it on the table.

A good goal is to contribute 10 to 15 percent of your salary to retirement accounts including any employer match. Increase your contribution by 1 percent every year until you reach this goal.

Remember that 401(k) contributions are pre-tax. They reduce your taxable income, so the actual hit to your paycheck is smaller than the contribution amount.