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Understanding your US paycheck: from gross pay to take-home

Where the money goes between your salary and your bank account - federal withholding, Social Security, Medicare, 401(k), health premiums and state tax - with a worked biweekly example for 2026.

By Stuart Mathieson · 2 November 2026 · 6 min read

A US paycheck can lose a quarter to a third of its gross pay before it reaches your account, spread across half a dozen lines with acronyms on them. I'm based in Scotland, where payslips have their own puzzles, and I built the US paycheck calculator on this site from IRS and Social Security Administration publications. This guide walks through each deduction in the order that matters, using the figures for 2026.

The order things come off

The order matters, because some deductions reduce the pay that later ones are worked out on:

1. Pre-tax benefits under a Section 125 plan - health, dental and vision premiums, a flexible spending account, and HSA contributions made through payroll. These reduce the pay that both income tax and Social Security and Medicare are charged on.
2. Pre-tax retirement contributions - a traditional 401(k) or 403(b). These reduce the pay that income tax is worked out on, but not Social Security and Medicare.
3. Federal income tax withholding - based on your W-4 and the IRS withholding tables.
4. Social Security and Medicare - often shown together as FICA.
5. State and local income tax - where your state or city charges it.
6. After-tax deductions - Roth 401(k) contributions, union dues, wage garnishments and so on.

Federal income tax withholding

Your employer withholds federal income tax each payday, using the details you gave on Form W-4: filing status, other jobs, dependants, and any extra you ask them to hold back. The aim is to collect roughly your year's tax across the year.

Withholding is an estimate, not your actual tax. The real figure is settled when you file your return the following spring. If too much was withheld, you get a refund; too little, and you owe the difference. A large refund isn't a bonus - it's your own money, lent to the government interest-free.

The tax itself is worked out on the brackets: after the standard deduction ($16,100 single, $32,200 married filing jointly, $24,150 head of household for 2026), each slice of income is taxed at its own rate. I've explained that properly in how US tax brackets work. If your circumstances change - a second job, a marriage, a new baby - the IRS's online Tax Withholding Estimator will suggest a new W-4.

Social Security and Medicare (FICA)

These two are flat percentages, with no standard deduction:

Your employer pays a matching 6.2% and 1.45% on top - that part never appears on your payslip. Social Security stops once your wages for the year pass $184,500, so the most an employee pays in 2026 is $11,439. High earners notice their paychecks get bigger late in the year when that happens.

The Additional Medicare Tax has a quirk. The amount you owe depends on filing status: 0.9% on wages over $200,000 if you're single or head of household, and over $250,000 for a married couple filing jointly. But your employer has to start withholding it once your wages from that job pass $200,000, whatever your status. So a married person earning $230,000, with a spouse who earns nothing, has $270 withheld but owes none of it on a joint return - it comes back as a credit when they file. Two married earners each on $150,000 have nothing withheld but owe 0.9% on $50,000 between them.

Retirement contributions

A traditional 401(k) contribution comes out before income tax, so it lowers your federal (and usually state) income tax. It doesn't lower Social Security or Medicare. For 2026 you can defer up to $24,500, plus a catch-up of $8,000 from age 50, or $11,250 if you're 60 to 63 and your plan allows it.

A Roth 401(k) contribution comes out after tax: no saving today, but qualifying withdrawals in retirement are tax-free.

Health premiums and HSAs

Health insurance premiums paid through a Section 125 (cafeteria) plan come off before income tax and before Social Security and Medicare. That makes them the most tax-efficient deduction on most paychecks.

The same goes for HSA contributions made through payroll, if you have a qualifying high-deductible health plan. The 2026 HSA limits are $4,400 for self-only cover and $8,750 for family cover, with an extra $1,000 from age 55. HSA money you contribute yourself, outside payroll, is still deductible on your return, but it doesn't escape FICA.

State and local income tax

States set their own rules entirely. Some, such as Texas and Florida, don't tax wages at all; others have flat rates or their own brackets, and a few cities and counties add a local income tax on top. Most states start from your federal figures but have their own deductions, so a single percentage is only ever an estimate - my calculator asks for one, and says so.

A worked example: $75,000, paid biweekly

Here's a single filer on $75,000 a year, paid every two weeks (26 paychecks). They put 5% into a traditional 401(k), pay $2,400 a year in health premiums through a Section 125 plan, and live in a state where I've assumed a flat 4% income tax.

• Pay subject to FICA: $75,000 − $2,400 = $72,600
• Pay subject to income tax: $72,600 − $3,750 (401(k)) = $68,850
• Federal taxable income: $68,850 − $16,100 = $52,750

The per-paycheck figures are each rounded to the cent, so they don't quite add up to the last penny.

Two things stand out. Federal income tax is only about 8.4% of gross pay here, and Social Security and Medicare together take almost as much. And the $6,150 going into the 401(k) and health plan only reduces take-home pay by $4,367 - the other $1,783 is tax that would otherwise have been paid.

Biweekly versus semimonthly

Biweekly pay means 26 paychecks a year, so two months each year have three paydays. Semimonthly pay - on the 15th and the last day of the month, say - means 24 slightly larger paychecks. The annual total is the same; only the budgeting differs. If your rent is monthly, those "extra" biweekly paychecks are a handy time to top up savings.

New deductions you claim on your return

The 2025 tax law known as the One, Big, Beautiful Bill added some deductions for 2025 to 2028 that you can claim whether or not you itemise:

• Tips - up to $25,000 of qualified tips a year.
• Overtime - up to $12,500 ($25,000 on a joint return) of qualified overtime pay, which in practice means the extra "half" in time-and-a-half.
• Seniors - an extra $6,000 per person aged 65 or older.

All three phase out at higher incomes (from $150,000, or $300,000 joint, for tips and overtime; from $75,000, or $150,000 joint, for the senior deduction). They're claimed when you file, so they don't show on a paycheck unless you adjust your W-4 to account for them. My calculator doesn't include them.

Checking your own paycheck

Put your salary, filing status, pay frequency and deductions into the US paycheck calculator and compare the result with a real payslip. Small differences are normal: payroll systems use the IRS withholding tables period by period, and your actual tax is only settled when you file. If you're consistently off by a lot, check your W-4 with your employer or use the IRS estimator. For anything beyond a straightforward salary - several jobs, investment income, itemised deductions - a tax professional is worth the fee.

Written by Stuart Mathieson

I'm a freelance web developer based in Scotland, and I build and maintain every calculator on this site myself. I check the figures in these guides against HMRC, the IRS and the other official sources listed below, but I'm not a tax adviser - for decisions that matter, talk to one. More about me.