Your employer will deduct money from your paycheck for federal and state income taxes, as well as for two federal programs: Social Security and Medicare. The amount withheld for federal expenses will depend on your income, number of dependents, and filing status.
Please note that the salary paycheck calculator provided through the MoneySourceDeals on this page is intended to offer general guidance and estimates only. It is not recommended to rely on this calculator to calculate exact taxes, payroll, or other financial data.
Additionally, these calculators are not designed to provide tax or legal advice and do not represent any MoneySourceDeals service or solution. If you have any specific requirements or concerns, we recommend consulting a professional advisor or accountant.
Table of Contents
Guide to Calculating Your Salary Paycheck
Our salary paycheck calculator simplifies payroll calculations, but let's examine some essential calculations in detail.
Calculating net income
- To determine your taxable income, subtract any pre-tax contributions to benefits.
- Then, withhold all applicable taxes, including federal, state, and local taxes.
- Next, deduct any post-tax contributions to benefits.
- If necessary, wages may be garnished.
- The final result will be your net income.
Calculating Annual Income
To calculate an annual salary, multiply the gross pay by the number of pay periods per year. For instance, if an employee earns $1,500 per week, their annual income would be $78,000 (1,500 x 52).
Calculating taxes deducted from a paycheck
- To calculate federal income tax, refer to employee withholding certificates and current tax brackets.
- Use the latest rates for Medicare and Social Security to calculate Federal Insurance Contribution Act (FICA) taxes.
- Determine if state income tax, other state and local taxes, and withholdings apply.
- Divide the sum of all applicable taxes by the employee's gross pay.
- The result is the percentage of taxes deducted from a paycheck.
However, calculations are just one aspect of the overall paycheck.
What is a paycheck?
A paycheck is the compensation that businesses provide to their employees for their work. The frequency of paychecks varies based on employer preferences, applicable state laws and regulations, and business-specific requirements, such as collective bargaining agreements covering union employees.
Types of Paychecks
Traditionally, employees would receive printed checks either in person or by mail. However, nowadays, it is more common for the money to be electronically deposited into a bank account. In addition, some employers may offer optional alternatives to paychecks, such as paycards, which can be advantageous to unbanked workers.
How to Read a Paycheck
Unlike withholding certificates and other employment documents, they do not require much deciphering. Paychecks are easy to read as long as the payment information is correct.
Paycheck Information:
- Check number
- Employer’s name and address
- Employee’s name and address
- Check date
- Payment amount
- Employer’s bank account and routing numbers
- Check memo (optional)
Pay stub information
Most states require employers to provide employees with pay stubs, which are typically included with paychecks and list important details such as:
- Pay period start and end date
- Hours worked
- Gross pay
- Net or take home pay
- Federal and state income taxes
- Local taxes
- Medicare and Social Security taxes
- Deductions for benefits
- Wage garnishments
- Year-to-date totals
- Paid time off (PTO) balances
Pay stubs can vary depending on individual circumstances and state requirements. It is important to include all necessary information on the pay statement and deliver it to employees in a timely manner, as required by state law.
Understanding Paychecks: Withholdings and Deductions
Newcomers to the workforce may be surprised to find that their take-home pay is less than their gross pay due to taxes, withholdings, and deductions. Newcomers to the workforce may be surprised to find that their take-home pay is less than their gross pay due to taxes, withholdings, and deductions. These may include:
Federal income tax withholding
Employers withhold federal income tax from their employees' pay based on current tax rates and the information provided on Form W-4, Employee Withholding Certificate. The form requires employees to provide their filing status, note any dependents, report multiple jobs or working spouses (for married filing jointly purposes), and make any necessary adjustments.
FICA withholding
FICA is a two-part tax. Both employees and employers pay 1.45% for Medicare and 6.2% for Social Security. The Social Security tax is no longer deducted from employee earnings for the rest of the year once they reach the wage base limit of $168,600. Employees with high income may also be subject to an Additional Medicare tax of 0.9%, which is paid only by the employee, not the employer.
Withholding of state and local taxes
State and local taxes vary by geographic region, with some charging more than others. Examples include
- State and local income tax
- State unemployment tax (SUTA)
- Short-term disability
- Paid family medical leave
Benefit deductions
Businesses that provide health insurance, dental insurance, retirement savings plans, and other benefits often split the cost with their employees and deduct it from their pay. The deduction may be pretax or post-tax, depending on the type of benefit and applicable regulations. Pretax deductions are more beneficial to employees because they reduce their taxable income.
Wage garnishments
Employers may be required to deduct garnishments from employee wages if they receive a court order to do so. This can happen if an employee defaults on a loan, has unpaid taxes, or is required to pay child support or alimony.
FAQs about paycheck calculator
Is a pay stub the same as a paycheck?
Although paychecks and pay stubs are often provided together, they are not the same thing. A paycheck is a directive to a financial institution that approves the transfer of funds from the employer to the employee. A pay stub, on the other hand, is an explanatory document that provides a breakdown of the employee's earnings and deductions.
What should a pay stub look like?
Pay stubs generally show how an employee's earnings for a particular pay period were derived, along with line items for taxes withheld, voluntary deductions, and any other benefits received. Additional details may be required by state or local governments.
What should be done with a paycheck stub?
Pay stubs are used to verify payment accuracy and may be necessary when settling wage/hour disputes. Employees may choose to keep their pay stubs for their own records, but it is not required. Employers, on the other hand, are required to keep payroll records for the specific lengths of time mandated by federal and state governments.
What should you do if you do not receive your paycheck or if it is late?
The appropriate course of action will depend on the reason for the missed or late paycheck. If the issue is due to an honest mistake, it can usually be resolved by contacting the employer's HR department.
How to create an employee paycheck?
Employers usually have two options for creating paychecks.
1. To print checks each pay period, order check stock from the office supply store or the bank where the business has its payroll account.
2. Consider working with a payroll service provider that offers packages including check signing and stuffing on behalf of the employer.