How To Calculate Your Paycheck After Taxes
As you use the paycheck calculator or follow the instructions for how to calculate take-home pay, please keep in mind that the results are merely estimates. Whether you realize it or not, your actual net pay from your employer is merely an estimate as well. After all, if any unexpected income or tax-bracket related events occur between now and the end of the year (get a pay raise, lose your job, inherit assets, etc.), your actual income taxes will be different from from the amounts your employer is withholding.
In other words, estimating your withholding taxes is far from being an exact science. Your employer is simply following a mandatory withholding guide provided to them by the IRS. But even the IRS guide can't predict your future, so there's no way to know your exact tax liability prior to actually completing your federal and state income tax forms at the end of the year.
If you would like to calculate your net pay yourself, below you will find the steps used by the paycheck tax withholding calculator (your employer's method may be different). To further your understanding, I will use the following information as an example in the steps showing how to figure out net pay:
| State: | Minnesota |
| Filing status: | Married |
| Pay frequency: | Bi-weekly |
| Regular hourly wage: | $25.00 |
| Overtime rate (1.5 x reg rate): | $37.50 |
| Regular hours worked this period: | 80 |
| Overtime hours worked this period: | 5 |
Step #1: Calculate Your Gross Wages
The gross wages for the example would be calculated as follows:
| Gross Wages | = ((regular hours x regular wage) + (overtime hours x overtime rate)) |
| = ((80 x $25.00) + (5 x $37.50)) | |
| = ($2,000 + $187.50) | |
| = $2,187.50 |
For the purposes of looking up the tax bracket, we calculate the annual gross income based on the current pay period.
| Annual Gross | = current period gross wages x pay periods per year |
| = $2,187.50 x 26 | |
| = $56,875 |
Step #2: Calculate Your Taxable Wages
To calculate taxable annual wages, subtract the standard deduction from the yearly gross wages:
| Annual Taxable Wages | = annual gross wages - standard deduction |
| = $56,875 - $12,200 | |
| = $44,675 |
Note that if you have any tax-deferred amounts (401k, HSA, etc.) withheld from your paycheck, you will subtract those annualized amounts from your annual gross wages in this step as well.
Step #3: Calculate Your Federal Withholding
Find your tax bracket in the following tables based on your marital status and annual taxable wages. Your bracket will be the row where your taxable yearly wages first exceeds the "Excess over" amount.
2019 Federal Withholding Tables| Excess over | Withhold | Percent |
|---|---|---|
| $0.00 | $0.00 | 0% |
| $3,800.00 | $0.00 | 10% |
| $13,500.00 | $970.00 | 12% |
| $43,275.00 | $4,543.00 | 22% |
| $88,000.00 | $14,382.50 | 24% |
| $164,525.00 | $32,748.50 | 32% |
| $207,900.00 | $46,628.50 | 35% |
| $514,100.00 | $153,798.50 | 37% |
| Excess over | Withhold | Percent |
|---|---|---|
| $0.00 | $0.00 | 0% |
| $11,800.00 | $0.00 | 10% |
| $31,200.00 | $1,940.00 | 12% |
| $90,750.00 | $9,086.00 | 22% |
| $180,200.00 | $28,765.00 | 24% |
| $333,250.00 | $65,497.00 | 32% |
| $420,000.00 | $93,257.00 | 35% |
| $624,150.00 | $164,709.50 | 37% |
Since, in our example, the person is married and has estimated annual taxable wages of $44,675, the following tax bracket will apply:
| Excess over | Withhold | Percent |
|---|---|---|
| $31,200.00 | $1,940.00 | 12% |
You would then calculate your annual federal income taxes as follows:
| Annual Fed Taxes | = $1,940 + (12% of excess over $31,200) | |
| = $1,940 + (.12 x ($44,675 - $32,475)) | ||
| = $1,940 + (.12 x $13,475) | ||
| = $1,940 + $1,617 | ||
| = $3,557 |
From there, you would calculate the federal withholding for the current period:
| Current Federal Withholding | = annual fed taxes ÷ pay periods per year | |
| = $3,557 ÷ 26 | ||
| = $136.81 |
Step #4: Calculate Your Social Security Withholding
The social security (SS) withholding would be equal to 6.2% of the example gross wages, which you would calculate as follows:
| Current SS Withholding | = annual gross wages x SS rate ÷ pay periods per year | |
| = $56,875 x .062 ÷ 26 | ||
| = $3,526.25 ÷ 26 | ||
| = $135.63 |
Step #5: Calculate Your Medicate Withholding
Your medicare withholding would be equal to 1.45% of your gross wages, which in our example would be calculated like this:
| Current Medicare Withholding | = annual gross wages x medicare rate ÷ pay periods per year | |
| = $56,875 x .0145 ÷ 26 | ||
| = $824.69 ÷ 26 | ||
| = $31.72 |
Step #6: Calculate Your State Withholding
Find the state tax bracket (popup window).
With federal taxable wages of $44,675, and the example person being from Minnesota, the state tax rate would be roughly 7.05%. Therefore the state tax withholding would be calculated as follows:
| Current State Withholding | = annual taxable wages x state tax rate ÷ pay periods per year | |
| = $44,675 x .0705 ÷ 26 | ||
| = $3,149.59 ÷ 26 | ||
| = $121.14 |
Step #7: Calculate Total Withholding
Based on the example, the total withholding would be the sum of all of the withholding amounts we previously calculated:
| Federal Withholding: | $136.81 |
| SS Withholding: | $135.63 |
| Medicare Withholding: | $31.72 |
| State Withholding: | $121.14 |
| Total Withholding: | $425.30 |
Note that if you have any after-tax paycheck withholding (health or dental insurance premiums, etc.), you will need to add them to the Total Withholding before calculating your net pay.
Step #8: Calculate Net Pay
To calculate net pay, subtract the total withholding for the pay period from the gross wages for the period. In our example, you would calculate your net pay as follows:
| Gross wages: | $2,187.50 | |
| - Total withholding: | $425.30 | |
| = Net Pay: | $1,762.20 |
Whew! Aren't you glad you found the calculator on this page to do all of the above calculating for you?
Estimate Taxes on Paycheck from Pay Stub
The following check stub calculator will calculate the percentage of taxes withheld from your paycheck, and then use those percentages to estimate your after-tax pay on a different gross wage amount. You can either enter the year-to-date (YTD) figures from your payslip, or for a single pay period.
Secret Tip For Increasing Your Net Pay
Have you ever stopped to carefully consider who is ultimately responsible for how much you earn from each hour of work?
If you have given this serious thought, you will have come to understand that YOU are the one who has the final say in how much you profit from an hour of work.
Why?
Because your ultimate profit from one hour of work will depend on whether or not you spend the entire hour's net pay on expenditures that eventually lose all of their value.
What most people fail to realize, is that if they invest a portion of each hour's net pay, that one hour of work will continue to pay dividends for as long as they leave the net pay invested. And the greater the percentage invested, the greater the dividends.
"No big deal," you say? Calculate your net hourly pay and then read the eye-opening, customized text that follows the form.
If you spend the entire $0.00 on expenditures that eventually become worthless, you have limited your net pay for that one hour of work to just $0.00.
On the other hand, if you invest $0.00 (0%) of one hour's net pay for 0 years in an investment earning a 0% return, you will have increased your net pay from that one hour of work from $0.00 to $0.00.
That's an increase of $0.00 without working any harder or longer than you are now.
Why isn't anyone selling you on the benefits of saving? That's easy. There's no money in it for sellers when compared with other products and services they can sell you.
