Salary Paycheck Calculator - US Federal Results

The more taxable income you have, the higher tax rate you are subject to. This calculation process can be complex, so PaycheckCity’s free calculators can do it for you! To learn how to calculate income tax by hand, follow these step-by-step instructions.

The federal income tax is a tax on annual earnings for individuals, businesses, and other legal entities. All wages, salaries, cash gifts from employers, business income, tips, gambling income, bonuses, and unemployment benefits are subject to a federal income tax.

For each payroll, federal income tax is calculated based on wages and the answers provided on the W-4 and year to date income, which is then referenced to the tax tables in IRS Publication 15-T. The current tax rates are 0%, 10%, 12%, 22%, 24%, 32%, 35%, or 37%. Again, the percentage chosen is based on the paycheck amount and your W4 answers.

Social Security tax is 6.2% on $147,000 of earned income. The maximum Social Security tax for employees is $9,114. Social Security is also known as OASDI (Old Age, Survivors, and Disability Insurance). Employees can log into www.ssa.gov to verify their wages and confirm their benefits at various retirement ages.

Medicare is meant to supplement an employee’s healthcare benefits when they reach retirement age. Both employers and employees are required to contribute to Medicare at a rate of 1.45%. For employees, there is an additional 0.9% Medicare tax on wages earned after a $200,000 threshold ($250,000 for married filing jointly, or $125,000 for married filing separately). This means when an employee’s income reaches the threshold in a calendar year, the employer should withhold 2.35% for the employee’s Medicare, and it’s called the Additional Medicare Tax. The Social Security and Medicare taxes are collectively known as FICA (Federal Insurance Contributions Act). Discover how FICA taxes impact your paycheck and benefits.

Depends on your paycheck’s wages, filing status (single, married filing jointly, etc), and how you answer your W-4 form questions. These answers are referenced to the IRS tax tables.

Usually, this tax equals $0 if the wages are not high enough. Wages need to be higher than the standard deduction. To calculate your federal withholding by hand see these step-by-step instructions and examples.

Explore deductions and credits available, such as contributions to retirement accounts, to potentially lower your taxable income.