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How Is Take-Home Pay Calculated?
Take-home pay is what lands in your bank account after taxes are withheld from your gross salary. Here is exactly how it is calculated in 2026.
The formula
Take-home pay = gross salary − federal income tax − Social Security − Medicare − state income tax − pre-tax deductions (like 401(k)).
Step 1: Federal income tax
First, subtract the 2026 standard deduction ($16,100 for single filers) from your gross salary to get taxable income. Then apply the progressive federal brackets — only the income inside each bracket is taxed at that bracket’s rate, so your effective rate is lower than your top bracket.
Step 2: FICA (Social Security & Medicare)
Social Security is 6.2% of wages up to the $184,500 wage base. Medicare is 1.45% of all wages, plus an extra 0.9% on income above $200,000 (single). FICA is calculated on gross wages and is not reduced by the standard deduction.
Step 3: State income tax
Most states levy their own income tax on top of federal. Nine states have no wage income tax at all. Rates and brackets vary widely by state.
Step 4: Pre-tax deductions
401(k) and similar contributions reduce your taxable income for income tax (but not for FICA), lowering your tax bill while moving money to retirement.
Want the exact number for your salary and state? Use our free take-home pay calculator.