Guide · 2026 tax year
How take-home pay is calculated
Your salary is a promise. Your paycheck is what survives four deductions. This is exactly how one becomes the other, no jargon, with the arithmetic shown in full.
Gross vs net: the only two numbers that matter
Gross pay is the figure on your offer letter: the headline salary before anything is taken out. Net pay, or take-home pay, is what actually reaches your bank account after withholding.
The gap between them is not one tax. It is four separate deductions, each with its own rules, calculated in a specific order. Two of them (federal and state income tax) are progressive or rate-based and depend on where you live. The other two (Social Security and Medicare, together called FICA) are flat percentages, but one of them stops partway up the income scale.
Understanding which is which is the difference between being surprised by your payslip and being able to predict it.
1 · Federal income tax
This is usually the largest single deduction, and the most misunderstood. It is calculated in two steps.
Step one: subtract the standard deduction
Not all of your salary is taxable. Everyone can subtract a fixed amount first: the standard deduction, which for 2026 is $16,100 for a single filer and $32,200 for a married couple filing jointly. Whatever remains is your taxable income.
On a $80,000 salary: $80,000 − $16,100 = $63,900 of taxable income. The first $16,100 is never taxed at all.
Step two: run it through the brackets, in slices
Here is the part almost everyone gets wrong. Being "in the 22% bracket" does not mean 22% of your income is taken. Brackets are progressive: your income is cut into slices, and each slice is taxed only at its own rate.
So $63,900 of taxable income is not taxed at one rate; it is taxed like this:
The practical consequence: a raise can never leave you worse off. Crossing into a higher bracket only affects the dollars above the threshold. The money below it keeps being taxed exactly as before.
2 · State income tax
This is where the same salary stops meaning the same thing. US states take one of three approaches:
No income tax
Some states levy no income tax at all, Texas and Florida among them. Your only income-tax withholding is federal, so identical salaries take home noticeably more.
Flat rate
One percentage applied to income, regardless of how much you earn. Pennsylvania works this way. Simple to predict.
Progressive
Their own brackets, sliced exactly like the federal system, often with their own standard deduction. California is the clearest example, and its top rates are among the highest.
The size of this effect is easy to underestimate. The same $80,000 salary leaves $65,110 in Texas but $61,762 in California, a gap of $3,348 a year, for the same job. That is the single biggest reason to look at a figure for your state rather than a national average.
3 · Social Security and 4 · Medicare
These two are collectively FICA, the payroll taxes that fund retirement and health programmes. They are flat percentages with no brackets and no standard deduction, so they apply from your first dollar. But they behave differently at the top.
Social Security: 6.2%, but it stops
Charged at 6.2% of earnings, but only up to an annual wage base of $184,500 in 2026. Earn beyond that and the deduction simply stops for the rest of the year. This is why high earners often notice their paychecks growing towards December: they have hit the cap.
On $80,000: $80,000 × 6.2% = $4,960.00.
Medicare: 1.45%, and it never stops
Charged at 1.45% on all earnings, with no cap. Above $200,000 for a single filer ($250,000 filing jointly), an additional Medicare surtax of 0.9% applies to the excess. Unlike almost everything else in the tax code, these thresholds are fixed in law and are not adjusted for inflation.
On $80,000: $80,000 × 1.45% = $1,160.00, below the surtax threshold, so no extra.
The full worked example
$80,000 a year, single filer, Texas (2026). Every step, start to finish:
$14,890 withheld, $65,110 kept, an effective rate of 18.6%. Split across 26 biweekly paychecks, that is $2,504.23 landing in the account every two weeks.
Effective vs marginal rate
Two numbers, constantly confused, answering different questions.
Effective rate
18.6%
Total tax ÷ gross salary. Answers: what am I paying overall?
Marginal rate
29.6%
Tax on your next dollar. Answers: what is a raise worth?
The marginal rate is the more useful of the two when you are negotiating. At $80,000 in Texas, a $5,000 raise does not add $5,000 to your take-home; it adds about $3,518. Most calculators only show you the effective rate, which is why raises so often feel smaller than expected.
From a year to a paycheck
Annual figures are useful for comparing offers; paycheck figures are what you actually budget with. The conversion is division, but by how much depends on your employer's schedule, and the difference trips people up.
Note that biweekly (26) and semi-monthly (24) are not the same thing, even though both are loosely called "twice a month". Biweekly pays every two weeks, which produces two months a year with three paychecks.
What this calculation deliberately excludes
A calculator that models everything would ask you twenty questions and still be guessing. This one estimates the four deductions that dominate almost every paycheck, and stops there. It does not include:
- Pre-tax deductions: 401(k), HSA, health premiums. These reduce taxable income, so they lower your tax but also your take-home. They can move the number significantly.
- Tax credits: the Child Tax Credit, Earned Income Credit and others reduce tax owed directly, and are settled when you file rather than in withholding.
- Local and city taxes: some cities and school districts levy their own income tax on top of the state's.
- Your Form W-4: what your employer actually withholds depends on the elections you made there, which is why your payslip may differ from any estimate.
- Other income: a second job, a spouse's salary, investments or bonuses all change the picture.
This is why every figure here is labelled an estimate. It is a fast, honest answer to "roughly what will I take home?", not a substitute for your payslip or a tax professional.
Glossary
- Gross pay
- Your salary before any deductions: the headline number.
- Net pay / take-home pay
- What reaches your bank account after withholding.
- Taxable income
- Gross pay minus the standard deduction; what the brackets apply to.
- Standard deduction
- A fixed amount everyone can subtract before tax is calculated: $16,100 single, $32,200 jointly, in 2026.
- Tax bracket
- An income band with its own rate. Only the income inside the band is taxed at that rate.
- FICA
- Social Security plus Medicare: the payroll taxes.
- Wage base
- The earnings ceiling above which Social Security stops being charged, now $184,500 in 2026.
- Withholding
- Tax your employer removes from each paycheck and sends to the government on your behalf.
- Form W-4
- The form telling your employer how much to withhold. Getting it wrong means a surprise at filing time.
Frequently asked questions
- Why is my take-home pay so much lower than my salary?
- Four deductions sit between the two: federal income tax, state income tax (in most states), Social Security and Medicare. On a $80,000 salary in a state with no income tax, they remove about $14,890 a year, roughly 18.6% of gross. In a high-tax state the gap is wider.
- What is the difference between the effective and marginal tax rate?
- The effective rate is your total tax divided by your gross salary, what you actually pay overall (18.6% in the example). The marginal rate is what your next dollar is taxed at (29.6%). The marginal rate is always higher in a progressive system, and it is the one that tells you what a raise is really worth.
- Does a higher tax bracket mean all my income is taxed at that rate?
- No, and this is the most common misunderstanding in US tax. Brackets are progressive: each slice of your income is taxed only at its own bracket's rate. Moving into a higher bracket only affects the dollars above that threshold, never the ones below. A raise can never leave you with less money after tax.
- Why does Social Security stop being deducted later in the year?
- Social Security is only charged on earnings up to an annual wage base of $184,500 in 2026. Once your year-to-date earnings pass it, the 6.2% stops for the rest of the year, so your paychecks get bigger. Medicare has no cap and continues all year.
- Why do two people with the same salary take home different amounts?
- Most often, the state. $80,000 in Texas leaves $65,110, while the same salary in California leaves $61,762, a difference of $3,348 a year for identical work. Filing status, pre-tax deductions and local taxes account for the rest.
Now run it on your own salary
The theory is only useful with your number in it. Pick your state and the calculator applies everything above, live, as you type.