How to Calculate Your Take-Home Pay (With Examples)

You just got offered a job paying $75,000 per year. Great news! But how much will you actually take home each paycheck?

The answer is less than you might think. Between federal taxes, state taxes, Social Security, Medicare, and other deductions, your take-home pay can be 25-35% less than your gross salary.

Let's break down exactly what comes out of your paycheck and how to calculate your real take-home pay.

What Gets Deducted From Your Paycheck?

Your paycheck has two main categories of deductions:

Mandatory deductions (you can't avoid these):

• Federal income tax

• State income tax (in most states)

• Social Security tax (6.2%)

• Medicare tax (1.45%)

Voluntary deductions (you choose these):

• 401(k) contributions

• Health insurance premiums

• HSA/FSA contributions

• Life insurance

• Other benefits

Federal Income Tax: The Progressive System

Federal income tax uses a progressive tax bracket system. This means different portions of your income are taxed at different rates.

2026 Federal Tax Brackets (Single Filers):

Important: If you earn $75,000, you're NOT paying 22% on all of it. You pay 10% on the first $11,600, 12% on the next portion, and 22% only on income above $47,150.

Also, you get a standard deduction of $14,600 (single) or $29,200 (married filing jointly) before any tax is calculated.

Example: $75,000 Salary Breakdown

Let's calculate take-home pay for someone earning $75,000/year, single, living in California, paid bi-weekly:

That's about 75% of gross pay actually hitting your bank account.

Annually: $75,000 gross becomes roughly $56,300 take-home.

FICA Taxes: Social Security and Medicare

These are often called "payroll taxes" and they're unavoidable:

Social Security: 6.2% of your gross pay, up to $168,600 (2026 wage base). Your employer also pays 6.2%.

Medicare: 1.45% of all gross pay, no limit. Your employer matches this too.

Additional Medicare Tax: If you earn over $200,000 (single) or $250,000 (married), you pay an extra 0.9% Medicare tax.

Combined, FICA takes 7.65% right off the top of every paycheck.

State Income Tax: It Varies Wildly

State income tax ranges from 0% to over 13% depending on where you live:

No state income tax:

• Texas, Florida, Nevada, Washington, Wyoming, South Dakota, Alaska, Tennessee, New Hampshire (on wages)

Highest state taxes:

• California: up to 13.3%

• Hawaii: up to 11%

• New Jersey: up to 10.75%

• Oregon: up to 9.9%

• Minnesota: up to 9.85%

Living in Texas vs. California on a $75,000 salary can mean a difference of $3,000-$5,000/year in take-home pay.

How to Increase Your Take-Home Pay (Legally)

1. Contribute to a 401(k)

Pre-tax 401(k) contributions reduce your taxable income. Contributing $500/month saves you money on taxes AND builds retirement savings. Use our 401(k) Calculator to see the impact.

2. Use an HSA (Health Savings Account)

If you have a high-deductible health plan, HSA contributions are triple tax-advantaged: tax-deductible going in, tax-free growth, and tax-free withdrawals for medical expenses.

3. Use an FSA (Flexible Spending Account)

Set aside pre-tax money for medical expenses or dependent care.

4. Review your W-4

If you're getting a huge tax refund every year, you're overwithholding. Adjust your W-4 to keep more money in each paycheck (though your refund will be smaller).

5. Take advantage of commuter benefits

Pre-tax transit and parking benefits (up to $315/month) can save hundreds per year.

Common Paycheck Mistakes to Avoid

Mistake 1: Thinking gross salary is what you'll get

A $100,000 salary sounds great until you realize you're taking home closer to $70,000-$75,000.

Mistake 2: Not understanding tax brackets

A raise won't "put you in a higher tax bracket" and make you earn less. Only the additional income is taxed at the higher rate.

Mistake 3: Ignoring pre-tax benefits

Skipping 401(k) contributions to "have more money now" costs you tax savings AND employer matching (free money).

Mistake 4: Not accounting for all deductions

Health insurance, 401(k), and other deductions can take another 10-20% beyond taxes.

Paycheck Frequency Matters

Your pay frequency affects the size of each paycheck:

If you're switching from bi-weekly to semi-monthly pay, your individual paychecks will be slightly larger, but you'll get 2 fewer per year.

Take-Home Pay at Different Salary Levels

Here's roughly what you can expect (single filer, no state tax, standard deductions):

Higher earners pay a higher percentage in taxes, but still take home more in absolute dollars.

Calculate Your Exact Take-Home Pay

Everyone's situation is different. Your take-home pay depends on:

• Your filing status (single, married, head of household)

• Your state of residence

• Your W-4 withholding settings

• Your pre-tax deductions (401k, health insurance, etc.)

The Bottom Line

Understanding your take-home pay is crucial for:

• Creating a realistic budget

• Evaluating job offers (a higher salary in California might net less than a lower salary in Texas)

• Planning major purchases

• Maximizing your tax efficiency

Don't make financial decisions based on your gross salary. Know what actually hits your bank account.