How to Calculate Your Paycheck After Taxes

Gross Pay vs. Net Pay

Your gross pay is the total amount your employer pays you before any deductions. If your annual salary is $60,000, your gross pay per biweekly paycheck is $2,307.69 (that is $60,000 divided by 26 pay periods).

Your net pay, also called take-home pay, is what remains after all taxes and deductions are subtracted. For most Americans, net pay is roughly 70-80% of gross pay, depending on your tax bracket, state of residence, and benefit elections.

The gap between gross and net is where most people get confused. Let us break down every deduction so you know exactly where your money goes.

Federal Income Tax

Federal income tax is the largest deduction for most workers. The US uses a progressive tax system, meaning different portions of your income are taxed at different rates. For the 2026 tax year, the brackets for a single filer are approximately:

A common misconception is that moving into a higher tax bracket means all your income gets taxed at that rate. That is not how it works. Only the income within each bracket is taxed at that bracket’s rate. So if you earn $60,000, the first $11,925 is taxed at 10%, the next $36,550 at 12%, and the remaining $11,525 at 22%. Your effective tax rate ends up being much lower than your marginal rate.

FICA Taxes: Social Security and Medicare

FICA stands for the Federal Insurance Contributions Act. These are mandatory payroll taxes that fund Social Security and Medicare. Every employee pays:

• Social Security: 6.2% of gross pay, up to the wage base limit ($168,600 in 2025, adjusted annually for inflation). Your employer also pays 6.2%, for a total of 12.4%.
• Medicare: 1.45% of all gross pay with no wage cap. Your employer matches this amount. If you earn over $200,000, an additional 0.9% Medicare surtax applies to earnings above that threshold.

Combined, FICA takes 7.65% of your gross pay (up to the Social Security wage base). On a $60,000 salary, that is $4,590 per year, or about $176.54 per biweekly paycheck.

State and Local Taxes

State income tax varies enormously depending on where you live. Nine states have no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. At the other end, states like California (up to 13.3%), New York, and New Jersey have some of the highest rates in the country.

Some cities and counties also levy local income taxes. New York City residents, for example, pay a city income tax on top of New York state tax and federal tax. If you live in one of these areas, local tax can add another 1-4% to your total tax burden.

Your state tax rate significantly impacts your take-home pay. Someone earning $60,000 in Texas keeps several thousand dollars more per year than someone earning the same salary in California, purely because of state tax differences.

Other Payroll Deductions

Beyond taxes, your paycheck may have additional pre-tax and post-tax deductions:

• Health insurance premiums. Your share of medical, dental, and vision insurance. These are usually pre-tax, meaning they reduce your taxable income.
• 401(k) or retirement contributions. Traditional 401(k) contributions are pre-tax. If you contribute 6% of a $60,000 salary, that is $3,600 per year that reduces your taxable income.
• HSA or FSA contributions. Health Savings Account and Flexible Spending Account contributions are pre-tax and reduce your taxable income.
• Life and disability insurance. Employer-sponsored policies may have employee-paid premiums deducted from your paycheck.
• Wage garnishments. Court-ordered deductions for child support, student loan defaults, or tax liens.

Step-by-Step Calculation Example

Let us calculate the biweekly take-home pay for someone earning $60,000 per year, filing single, living in a state with 5% income tax, and contributing 6% to a 401(k).

Hourly vs. Salary Calculations

If you are paid hourly, your gross pay changes each pay period. To estimate your paycheck, multiply your hourly rate by the number of hours worked. For overtime, hours beyond 40 per week are typically paid at 1.5 times your regular rate. The tax calculations work the same way, just applied to a different gross amount each period.

Salaried employees receive the same gross pay each period regardless of hours worked. This makes budgeting easier since your paycheck is predictable. However, bonuses, commissions, and overtime (for non-exempt salaried workers) are typically taxed at a flat supplemental rate of 22% for federal taxes, which can make those checks look different.

Calculate Your Paycheck Now

Skip the manual math. PrestoKit’s free Paycheck Calculator handles federal tax, state tax, FICA, and common deductions automatically. Enter your salary or hourly rate and see your exact take-home pay.