Payroll Tax Calculator

How US payroll taxes work

Payroll taxes in the United States include several distinct components that are withheld from an employee's gross wages each pay period. Understanding each component is important for both employers administering payroll and employees trying to understand their take-home pay. This calculator estimates the major federal payroll tax withholdings based on 2024 tax rates, using the standard withholding method for a single filer with no W-4 adjustments as a baseline estimate. Actual withholding may differ based on W-4 elections, filing status, additional income, and deductions.

The largest withholding for most employees is federal income tax. The federal income tax is progressive, with different rates applied to different bands of taxable income. For withholding purposes, the IRS provides wage bracket tables that translate gross wages per pay period into estimated tax withholding amounts. The calculation annualises the per-period wages, applies the standard deduction, and then calculates the tax using the current year's brackets before de-annualising to the per-period withholding amount. The 2024 standard deduction for single filers is $14,600, which means the first $14,600 of annual income is effectively taxed at zero.

Social Security tax is withheld at 6.2 percent of gross wages up to the annual wage base limit. In 2024, this limit is $168,600. Wages above this threshold in a calendar year are not subject to Social Security withholding. Medicare tax is withheld at 1.45 percent of all wages with no cap. Employees earning above $200,000 per year are also subject to the Additional Medicare Tax of 0.9 percent on wages above that threshold, which the employer withholds beginning in the pay period where the year-to-date wages exceed $200,000. Together, Social Security and Medicare are known as FICA taxes.

Employer's share of FICA taxes

In addition to the employee's share of FICA taxes, the employer is required to match the employee's Social Security (6.2 percent) and Medicare (1.45 percent) contributions. This means the total FICA cost to the employer is 7.65 percent of the employee's wages up to the Social Security wage cap, and 1.45 percent above the cap. The employer's matching contribution is not visible on the employee's pay stub but represents a significant additional labour cost. Self-employed individuals pay both the employee and employer portions as the self-employment tax, totalling 15.3 percent of net self-employment income, though they can deduct half of this from their taxable income.

State income tax withholding

Most US states levy an additional income tax on wages that must also be withheld by employers. State tax rates and structures vary significantly. Nine states have no income tax at all: Alaska, Florida, Nevada, New Hampshire (on wages), South Dakota, Tennessee (on wages), Texas, Washington, and Wyoming. At the other end, California's top marginal rate reaches 13.3 percent, the highest in the nation. Most states use a progressive bracket structure similar to the federal system, though some use a flat rate. The calculator provides a field for the applicable state tax rate so you can include state withholding in the net pay estimate.

Other common payroll deductions

Beyond mandatory tax withholdings, most payroll also includes voluntary deductions such as employee contributions to health insurance premiums, retirement plan contributions (401k, SIMPLE IRA), health savings account (HSA) contributions, and flexible spending account contributions. Pre-tax deductions for qualified benefit plans reduce the taxable wage base for both income tax and FICA withholding purposes, which is a significant tax advantage for employees and a modest reduction in employer FICA costs. The net take-home pay estimate in this calculator reflects taxes only and does not include voluntary benefit deductions, which vary by employee elections and employer plan designs.