What’s your real paycheck — after taxes?

Why your paycheck is smaller than your salary

You see “$75,000” on your offer letter and assume that’s what you’ll bring home. Then your first paycheck arrives and it’s roughly $2,200 every two weeks — about $57,000 a year, not $75,000. Where did the other $18,000 go?

Five places, in this order:

1. Pre-tax deductions (401(k), HSA, health insurance)

If you contribute 6% to your 401(k), that comes out before any tax is calculated. On a $75,000 salary, that’s $4,500 you never see — but you also don’t pay tax on it. HSA contributions and employer health insurance premiums work the same way. These are the only deductions that lower both your federal AND state taxable income, which is why financial planners obsess over them.

2. Federal income tax

The U.S. uses a progressive tax system — you pay 10% on your first dollars, then 12%, then 22%, and so on. Despite what some people think, jumping to a higher bracket doesn’t tax all your income at the higher rate. Only the dollars in that bracket get taxed at the higher rate. This is the difference between marginal rate (your top bracket) and effective rate (your actual percentage paid).

For 2026, the standard deduction is $16,100 for single filers, $32,200 for married filing jointly. That much income is shielded from federal tax entirely.

3. Social Security tax (6.2%)

Officially called OASDI, this funds Social Security retirement, disability, and survivors benefits. You pay 6.2% on every dollar you earn — but only up to the 2026 wage base of $184,500. Anything above that is exempt from Social Security tax. (Your employer also matches your 6.2%, so the program collects 12.4% on your wages total.)

4. Medicare tax (1.45%)

Funds the Medicare hospital insurance program. Unlike Social Security, there’s no wage cap — you pay 1.45% on every dollar you earn, no matter how high. High earners pay an additional 0.9% Medicare surtax on income above $200,000 (single) or $250,000 (married).

5. State income tax (varies wildly)

This is where geography matters most. Nine states have no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. On the other end, California’s top rate is 13.3% (12.3% plus a 1% mental health surcharge on income over $1M).

Most states use either flat rates (Colorado 4.4%, North Carolina 3.99%, Pennsylvania 3.07%) or progressive brackets similar to the federal system (New York, New Jersey, Minnesota, Hawaii). Several states cut their rates for 2026 — Kentucky dropped from 4% to 3.5%, North Carolina from 4.25% to 3.99%, Ohio moved to a 2.75% flat rate, Mississippi from 4.4% to 4%.

The 401(k) trick that pays you back twice

Every $1,000 you contribute to a traditional 401(k) reduces your taxable income by $1,000. If you’re in the 22% federal bracket and a 5% state, that $1,000 contribution costs you only $730 in take-home pay. The federal and state governments effectively pay $270 of your retirement contribution.

This is why financial planners say “contribute at least up to your employer match — that’s a 100% return” — but they also say contribute more if you can. The tax savings alone produce a 27%+ effective return before any market gains.

For 2026, the 401(k) contribution limit is $24,500 ($31,000 if you’re 50+). Note: Starting in 2026, if you earned over $145,000 the prior year, your catch-up contributions must go to a Roth account — meaning they don’t reduce current taxable income but withdraw tax-free in retirement.

What if I’m self-employed?

Self-employed workers pay both halves of FICA — 12.4% Social Security and 2.9% Medicare, totaling 15.3% on top of federal and state income tax. This is called the self-employment tax. The good news: you can deduct half of it (the “employer half”) from your federal taxable income, and you can deduct business expenses to lower your net income.

If you’re a 1099 contractor or freelancer, this calculator’s W-2 results don’t apply directly. Plan for an effective combined tax rate of 30-40% instead of the W-2 worker’s typical 22-30%.

Other things this calculator doesn’t show

• Local/city income tax — NYC, Philadelphia, Detroit, San Francisco, and Birmingham have city income taxes on top of state. Add 1-3.876% if you live or work in one of these.
• Disability insurance, FUTA, SUTA — Some states withhold for state disability (CA SDI = 1.1%, NY SDI = 0.5% capped).
• Roth 401(k) contributions — These come AFTER tax, so they don’t reduce your current take-home like traditional 401(k) does.
• The 0.9% additional Medicare tax — Kicks in only above $200k single / $250k married. This calculator includes it for high earners.