Paycheck Calculator

The gap between your salary and your bank deposit catches almost everyone out. A $85,000 salary does not deposit $85,000 — several deductions come out first, and they come out in a specific order that determines how much tax you owe.

Here is the sequence a payroll system follows:

1. Pre-tax deductions come off first. Traditional 401(k) contributions, health insurance premiums, HSA and FSA contributions reduce the wages that federal income tax is calculated on.
2. Federal income tax applies to what remains, minus the standard deduction — $15,000 for a single filer in 2025, $30,000 for married filing jointly.
3. FICA is charged separately. Social Security takes 6.2% up to the $176,100 wage base, and Medicare takes 1.45% with no cap. An extra 0.9% Medicare surtax applies above $200,000.
4. State tax applies, at anything from 0% to over 10% depending on where you live.

A crucial detail people miss: 401(k) contributions reduce your income tax but not your FICA. Social Security and Medicare are charged on the money before it is deferred.

Work through a real case. A single filer earning $85,000 in Texas, contributing nothing to a 401(k):

• Taxable income after the standard deduction: $70,000
• Federal income tax: about $10,015
• Social Security: $85,000 × 6.2% = $5,270
• Medicare: $85,000 × 1.45% = $1,232.50
• State tax in Texas: $0

Take-home is roughly $68,483 a year, or $2,634 every two weeks — an effective tax rate of about 19.4%, well below the 22% bracket that salary falls into.

That last point matters. Your marginal rate is not your effective rate. Being "in the 22% bracket" means only the dollars above the bracket threshold are taxed at 22%; everything below is taxed at 10% and 12%. Nobody pays their top bracket on their whole income.

Two levers worth testing above:

• Raise your 401(k) percentage. Every pre-tax dollar you defer is taxed at your marginal rate, so a dollar deferred by someone in the 22% bracket costs only about 78 cents of take-home.
• Compare states before you move. The nine states with no wage income tax often make up the difference through property or sales tax, so compare total cost rather than the headline rate.