Take-Home Pay Calculator 2026 - Salary After Taxes

Your pay stub tells a detailed story about where your hard-earned money goes before it reaches your bank account. Gross pay is the total amount your employer pays you, but your take-home pay (net pay) is what remains after federal income tax, state income tax, Social Security, Medicare, and any voluntary deductions like 401(k) contributions or health insurance premiums. Understanding each line item empowers you to make smarter financial decisions and avoid surprises at tax time.

The federal income tax system is progressive, meaning your income is taxed at increasing rates as it moves through each bracket. Many people mistakenly believe that earning more can result in less take-home pay, but this is a myth. Only the income within each bracket is taxed at that rate, so a raise always increases your net pay. Your effective tax rate, which is the total tax you pay divided by your total income, is always lower than your marginal bracket rate.

Pre-tax deductions are one of the most powerful tools for increasing your take-home pay. Contributions to employer-sponsored retirement plans like 401(k)s, Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs) reduce your taxable income, which lowers the amount of federal and state income tax withheld from each paycheck. For example, contributing $500 per month to a traditional 401(k) could save you $110 or more per month in taxes, depending on your bracket, making the effective cost of saving for retirement much lower than the contribution itself.

Federal Income Tax Brackets for 2026

The United States uses a progressive tax system, which means your income is divided into portions called brackets, and each portion is taxed at a progressively higher rate. A common misconception is that moving into a higher tax bracket means all of your income is taxed at that higher rate. In reality, only the income that falls within each bracket is taxed at that bracket's rate. The rate that applies to your last dollar of income is called your marginal tax rate, while your effective tax rate is the total tax you owe divided by your total taxable income. Your effective rate is always lower than your marginal rate because the initial portions of your income are taxed at lower rates.

Here is a practical example: suppose you are a single filer with $85,000 in taxable income in 2026. After claiming the standard deduction of $16,100, your taxable income is $68,900. The first $11,925 is taxed at 10% ($1,192.50), income from $11,926 to $48,475 is taxed at 12% ($4,386), and income from $48,476 to $68,900 is taxed at 22% ($4,493.50). Your total federal income tax would be approximately $10,072, giving you an effective federal tax rate of about 14.6% on your taxable income, even though your marginal bracket is 22%. Understanding this distinction is essential because it means a raise or bonus will never result in less overall take-home pay.

FICA Taxes: Social Security & Medicare

In addition to federal income tax, every paycheck is subject to FICA (Federal Insurance Contributions Act) taxes, which fund Social Security and Medicare. For 2026, the Social Security tax rate is 6.2% on earnings up to the wage base limit of $184,500. Once your year-to-date earnings exceed $184,500, you stop paying Social Security tax for the remainder of the year. The maximum Social Security tax an employee can pay in 2026 is $11,439. Medicare tax is 1.45% on all earnings with no wage cap. If you earn more than $200,000 as a single filer ($250,000 for married filing jointly), an Additional Medicare Tax of 0.9% applies to earnings above that threshold, bringing the total Medicare rate to 2.35% on high earnings.

Your employer matches the standard FICA taxes, paying an additional 6.2% for Social Security and 1.45% for Medicare on your behalf. If you are self-employed, you are responsible for both the employee and employer portions, resulting in a combined self-employment tax rate of 15.3% (12.4% for Social Security plus 2.9% for Medicare). However, self-employed individuals can deduct the employer-equivalent half of their self-employment tax when calculating their adjusted gross income, which provides some relief. Understanding FICA taxes is critical because unlike federal income tax, they are flat-rate taxes with no standard deduction or personal exemptions to reduce the taxable base.

Maximizing Your Take-Home Pay

One of the most effective strategies for increasing your net paycheck is to take full advantage of pre-tax deductions. Contributing to a traditional 401(k) or 403(b) retirement plan reduces your taxable income dollar for dollar. In 2026, the contribution limit is $24,500 (or $31,000 if you are age 50 or older). If you have access to a high-deductible health plan, a Health Savings Account (HSA) offers a triple tax advantage: contributions are tax-deductible, the balance grows tax-free, and qualified withdrawals for medical expenses are also tax-free. The 2026 HSA contribution limits are $4,400 for individual coverage and $8,750 for family coverage. Flexible Spending Accounts (FSAs) for healthcare or dependent care expenses also reduce your taxable income, though they come with use-it-or-lose-it rules that require more careful planning.

Beyond retirement and health accounts, review your W-4 withholding to make sure you are not having too much or too little tax withheld. If you consistently receive a large tax refund, you are effectively giving the government an interest-free loan. Adjusting your W-4 to reduce withholding puts more money in each paycheck throughout the year. Tax credits such as the Earned Income Tax Credit, Child Tax Credit, and education credits directly reduce your tax liability and can significantly boost your after-tax income. Additionally, employer benefits like commuter benefits, employer-paid life insurance (up to $50,000 of coverage is tax-free), and tuition reimbursement programs can provide valuable compensation without increasing your taxable income.

Common Paycheck Deductions Explained

Beyond taxes, your paycheck likely includes several voluntary and employer-sponsored deductions. Health insurance premiums are typically the largest non-tax deduction, covering medical, dental, and vision plans. Most employers pay a significant portion of the premium, but the employee share can range from $50 to $500 or more per pay period depending on the plan level and whether you cover dependents. Dental insurance premiums are generally more modest, and vision coverage is usually the least expensive. These premiums are almost always deducted pre-tax under a Section 125 cafeteria plan, which lowers your taxable income.

Retirement plan contributions through 401(k) or 403(b) plans are another major deduction. Traditional contributions are pre-tax, reducing your current taxable income, while Roth contributions are made with after-tax dollars but grow and can be withdrawn tax-free in retirement. Many employers offer a matching contribution, often 3% to 6% of your salary, which is essentially free money you should always try to capture. HSA and FSA contributions provide additional pre-tax savings opportunities for qualified medical or dependent care expenses.

Other common deductions include employer-sponsored life insurance, where coverage above $50,000 results in a small amount of imputed income added to your taxable wages. Short-term and long-term disability insurance premiums protect your income if you become unable to work. Commuter benefits, including transit passes and parking, can be deducted pre-tax up to monthly limits set by the IRS. Some employers also offer legal assistance plans, pet insurance, gym memberships, or student loan repayment assistance as payroll deductions. While each individual deduction may seem small, together they can represent a significant portion of your gross pay, which is why understanding every line on your pay stub is so important for managing your personal finances effectively.