If you have ever wondered why your paycheck is so much less than your salary suggests, you are not alone. A $75,000 salary does not mean $75,000 in your bank account. After federal income tax, Social Security, Medicare, and potentially state taxes, your actual take-home pay might be closer to $56,000–$60,000 depending on where you live and your deductions.
Understanding the gap between gross and net pay helps you budget accurately, negotiate salaries effectively, and make smarter financial decisions.
What Gets Deducted from Your Paycheck
Every paycheck faces several mandatory and optional deductions:
- Federal income tax: Based on your taxable income and filing status using the 2026 progressive brackets (10%–37%). The amount withheld depends on your W-4 elections.
- Social Security (OASDI): 6.2% of your gross pay up to the wage base of $184,500 in 2026. Your employer pays an additional 6.2%.
- Medicare: 1.45% of all earnings with no cap. An additional 0.9% surtax applies to earnings above $200,000 (single) or $250,000 (married filing jointly).
- State income tax: Varies from 0% (Texas, Florida, Nevada, and 6 others) to 13.3% (California). This is often the second-largest deduction after federal tax.
- Pre-tax deductions: 401(k) contributions, health insurance premiums, HSA contributions, and FSA contributions reduce your taxable income before taxes are calculated.
Gross to Net: A Real Example
Here is how a $75,000 salary breaks down for a single filer in 2026 with standard deduction and no state income tax:
- Gross salary: $75,000
- Federal income tax: ~$7,400 (after $16,100 standard deduction, effective rate ~9.9%)
- Social Security: ~$4,650 (6.2% × $75,000)
- Medicare: ~$1,088 (1.45% × $75,000)
- Total deductions: ~$13,138
- Take-home pay: ~$61,862 ($5,155/month or $2,379/biweekly)
How to Maximize Your Take-Home Pay
Several legal strategies can increase the amount that actually reaches your bank account:
- Optimize your W-4: If you consistently get a large tax refund (over $500), you are over-withholding. Adjust your W-4 to take home more each paycheck instead of giving the government an interest-free loan.
- Use pre-tax benefits: Health insurance premiums, FSA contributions, and commuter benefits all reduce your taxable income. A $200/month pre-tax health premium saves you roughly $50–$70/month in taxes.
- Contribute to an HSA: If you have a high-deductible health plan, HSA contributions ($4,300 individual / $8,550 family in 2026) are fully tax-deductible and reduce both income tax and FICA taxes.
- Consider Roth vs Traditional 401(k): Traditional 401(k) reduces your current taxable income (bigger paycheck now). Roth 401(k) is taxed now but grows tax-free. If you are in a low bracket now, Roth may be better long-term.
- Move to a no-income-tax state: If feasible, relocating from a high-tax state like California (13.3%) to Texas or Florida (0%) can increase take-home pay by 5–10%.
Self-Employment: A Different Calculation
Self-employed individuals face a different tax picture. You pay both halves of Social Security and Medicare (called self-employment tax), totaling 15.3% on net self-employment income up to the Social Security wage base, plus 2.9% Medicare on all income above that.
A self-employed person earning $75,000 pays roughly $10,600 in self-employment tax alone, on top of federal income tax. The silver lining: you can deduct half of your self-employment tax as an adjustment to income, and you have access to SEP IRAs (up to $70,000 in 2026) and Solo 401(k)s for tax-advantaged retirement savings.
Pay Frequency and Budgeting
How often you are paid affects budgeting. Common pay frequencies:
- Biweekly (every 2 weeks): 26 paychecks per year. Two months per year you get a "bonus" third paycheck.
- Semi-monthly (1st and 15th): 24 paychecks per year. Consistent monthly budgeting.
- Weekly: 52 paychecks per year. Four months per year have a fifth paycheck.
- Monthly: 12 paychecks per year. Requires careful budgeting to last the full month.
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Frequently Asked Questions
Why is my first paycheck at a new job smaller than expected?
Several factors cause this: your pay period may be partial (you started mid-cycle), benefit deductions like health insurance and 401(k) contributions have started, and withholding is calculated based on your W-4 elections. After your first full pay period, your paychecks should stabilize. Use our Take-Home Pay Calculator to estimate your expected net pay before starting.
Is a large tax refund a good thing?
Not really. A large refund means you overpaid taxes throughout the year — you gave the government an interest-free loan. It is better to adjust your W-4 withholding so you take home more each paycheck and receive a small refund (or owe a small amount) at tax time. If your refund was over $1,000, consider updating your W-4.
How much does a $10,000 raise actually increase my take-home pay?
It depends on your marginal tax bracket. In the 22% federal bracket with 6.2% Social Security and 1.45% Medicare, about 30% goes to federal taxes and FICA. Add state tax (0–13%) and your raise of $10,000 nets you roughly $5,700–$7,000 in additional take-home pay. Use our calculator to model your exact raise scenario.
Do I still pay Social Security tax after reaching the wage base limit?
No. Once your year-to-date earnings exceed the Social Security wage base ($184,500 in 2026), the 6.2% Social Security withholding stops. You will notice slightly larger paychecks for the remainder of the year. However, Medicare tax (1.45%) has no cap and continues on all earnings, with an additional 0.9% on high earners.