2023 Paycheck Calculator | Find Your Take Home Pay - Forbes Advisor (2024)

How Is Your Paycheck’s Income Tax Withholding Calculated?

When you start a new job, you’re required to complete an IRS Form W-4, which is used to determine how much federal income tax and other deductions will be withheld each time you get paid.

Information you supply on your W-4—including your tax filing status (such as single or married filing jointly) and number of dependents—will help your employer calculate the proper withholding. Completing your W-4 form correctly can protect you from being hit with a tax penalty if too little is withheld throughout the year.

You can make changes to your withholding at any time by submitting a new W-4 form to your employer.

If you’re required to pay state or local income taxes, you may face additional withholding for the appropriate taxing authorities in your state or community.

How Is Your Net Pay Calculated?

When you think of how much money you make in a year, you probably think of your salary before taxes are taken out. That’s your gross income. The amount you actually take home is typically much smaller and called your net pay.

It’s important to understand your net pay so you can budget around it—in other words, know how much money you can spend each month on rent, groceries, dinners out and other expenses.

Your net pay is essentially your gross income minus the taxes and other deductions that are withheld from your earnings by your employer. Your net pay each pay period is the final amount on your paycheck. Your annual net pay is your salary minus the money that’s withheld throughout the year.

What Is FICA Withholding on a Paycheck?

FICA stands for the Federal Insurance Contributions Act. It’s a law requiring employers and their workers to pay taxes to fund the Social Security and Medicare programs that benefit retirees, disabled people and even some children.

In 2022, these FICA taxes are being withheld from your paychecks:

• 6.2% of up to $147,000 in wages, for Social Security
• 1.45% of all your wages, for Medicare
• 0.9% extra on any wages over $200,000 in a calendar year, also for Medicare

Your employer withholds Social Security and Medicare taxes from your pay, then kicks in its own matching amounts—except for the additional 0.9% Medicare tax, which doesn’t require an employer match.

If you’re self-employed your FICA rates are doubled, since you’re paying on behalf of both the employee (you) and the employer (also you).

What Are the Other Deductions on Your Paycheck?

Beyond the withholding for income taxes, Social Security and Medicare, other regular paycheck deductions also might be shrinking your earnings. Your employer may be taking money out for:

• A contribution toward your health insurance costs
• Dental insurance premiums
• Vision coverage
• A contribution into a retirement account, such as a 401(k)
• Life insurance
• A health savings account (HSA)
• A flexible spending account (FSA)

Frequently Asked Questions (FAQs)

Do you get taxed more if paid monthly versus biweekly?

Whether you’re paid monthly or biweekly doesn’t affect the amount of your taxes. Regardless of how often you’re paid throughout the year, the withheld taxes will be the same at the end of the year.

How do you calculate your net pay?

Different factors impact your net pay, such as your tax filing status, the number of dependents, federal and state income taxes withheld, as well as Social Security and Medicare taxes. Various deductions, such as for retirement, health insurance and a flexible spending account (FSAs) will also reduce your net pay.

To find out your correct net pay, you may want to use our Payroll Tax Calculator.

What percentage of my paycheck is withheld for federal tax in 2022?

While there isn’t any one size that fits all when it comes to your tax withholdings, generally you can expect to have both FICA and federal income taxes withheld from your pay.

In 2022, your employer will withhold 6.2% of your wages (up to $147,000) for Social Security. Additionally, you must pay 1.45% of all of your wages for Medicare, without any limitations. If you earn over $200,000, you can expect an extra tax of .9% of your wages, known as the additional Medicare tax.

Your federal income tax withholdings are based on your income and filing status. For 2022, the federal income tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Regardless of your situation, you’ll need to complete a W-4 and submit it to your employer. The information you provide on your W-4 will determine the correct amount of tax withholdings.