Take-Home Paycheck Calculator Formula & How It Works
Net Pay = Gross Pay − Federal Tax − State Tax − FICA − Other Deductions
- FICA: Social Security 6.2% (up to $176,100) + Medicare 1.45%
- Federal income tax: marginal rate system (10–37% brackets)
- State income tax: 0% to 13.3% depending on state
- Pre-tax deductions: 401k, HSA, health insurance reduce taxable income
Your gross salary is reduced by: federal income tax (progressive brackets), state income tax (varies by state), FICA (Social Security + Medicare), and any voluntary pre-tax deductions (401k, health insurance, HSA). The remainder is your net take-home pay. Pre-tax deductions reduce your taxable income, lowering the tax bill.