Our Calculation Methodology
Our salary calculator follows the same process your payroll department uses, applying current federal and state tax laws in the correct order. Here's the step-by-step breakdown:
Step 1: Gross Income
Total Annual Salary
We start with your gross annual salary before any deductions. This is the number you see on your job offer or contract.
Step 2: Pre-Tax Deductions
401(k) and HSA Contributions
We subtract your 401(k) and HSA contributions from your gross income. These are "pre-tax" deductions, meaning they reduce your taxable income and save you taxes.
Step 3: FICA Taxes
Social Security and Medicare
We calculate FICA (Federal Insurance Contributions Act) taxes:
- Social Security: 6.2% on the first $184,500 of income (2026 limit)
- Medicare: 1.45% on all income
- Additional Medicare: 0.9% on income over $200,000 (single) or $250,000 (married)
Step 4: Federal Income Tax
We apply the 2026 progressive federal tax brackets to your taxable income (gross income minus pre-tax deductions). The US uses a bracket system, meaning different portions of your income are taxed at different rates.
Example: If you're single earning $80,000, you don't pay 22% on all of it. You pay 10% on the first $12,400, 12% on $12,401-$50,400, and 22% on $50,401-$80,000.
Step 5: State Income Tax
We apply your state's specific tax laws. Nine states have no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming). Other states use progressive systems or flat rates.
Step 6: Final Take-Home Pay
We subtract all calculated taxes from your gross income to arrive at your take-home pay: the actual amount deposited into your bank account each pay period.
Key Takeaways
- We use official 2026 federal tax brackets and current state tax laws
- Pre-tax deductions (401k, HSA) reduce your taxable income first
- FICA taxes (Social Security + Medicare) are 7.65% for most workers
- Accuracy is typically 95-98% for standard tax situations
Frequently Asked Questions
Find answers to common questions about your taxes and our calculator.
Ready to calculate your take-home pay?
Try our free calculator now.