Gross income vs. take-home pay
Gross income is your total compensation before anything is taken out — the salary on your offer letter, plus any bonuses, equity, or other earnings. Take-home pay, also called net pay, is what actually lands in your bank account after federal income tax, state income tax, FICA (Social Security and Medicare), and any pre-tax deductions for things like a 401(k), HSA, or employer health premiums.
The gap between the two often surprises people, especially as income climbs. A larger share of higher incomes falls into the higher federal brackets, the Additional Medicare surtax kicks in past certain thresholds, and pre-tax 401(k) and HSA contributions scale up. It's normal for someone earning $250,000 to take home a smaller percentage of their gross than someone earning $80,000 — and useful to know that number before budgeting against it.
How federal income tax is calculated
The U.S. uses a marginal, bracket-based system. For 2026 there are seven federal rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Before any tax is owed, you subtract either the standard deduction or your itemized deductions from your gross income. For 2026 the standard deduction is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household.
The single most important thing to understand about brackets — and the most commonly misunderstood — is that only the income that falls within a given bracket is taxed at that bracket's rate. Moving into a higher bracket does not retroactively tax all of your income at the higher rate. If you cross into the 24% bracket by $1,000, only that $1,000 is taxed at 24%; everything below is still taxed at the lower rates beneath it. A raise that pushes you into a new bracket will always increase your take-home pay, not decrease it.
FICA, state tax, and pre-tax deductions
FICA
FICA is the payroll tax for Social Security and Medicare. Social Security takes 6.2% of wages up to the 2026 wage base of $184,500 and stops above that. Medicare takes 1.45% on all wages with no cap, plus an Additional Medicare surtax of 0.9% on wages above $200,000 for single filers or $250,000 for married filing jointly. Your employer pays a matching share you don't see on your check.
State income tax
State income tax varies dramatically. A handful of states — Florida, Texas, Washington, and a few others — have no state income tax at all. Others, including California and New York, have top marginal rates above 10%. The difference between living in a no-tax state and a high-tax state can swing take-home pay by tens of thousands of dollars at higher incomes, which is why state is a meaningful input in any honest comparison.
Pre-tax deductions
Traditional 401(k) contributions, HSA contributions, and most employer health insurance premiums are taken out of your paycheck before federal income tax is calculated. That lowers your taxable income, which lowers the tax owed. It's why maxing pre-tax accounts changes net pay by less than the contribution amount — a $1,000 pre-tax contribution might only reduce take-home by $700 or so, depending on your marginal rate.
After-tax income for high earners
At higher incomes, more of each marginal dollar falls into the 32%, 35%, and 37% brackets. The 0.9% Additional Medicare surtax kicks in above $200,000 single or $250,000 married filing jointly. State income tax often scales with federal income, so the combined marginal rate on additional dollars can comfortably reach 40–50% in higher-tax states.
Equity compensation is its own complication. RSUs are taxed as ordinary income at vest, but the default federal withholding is the flat 22% supplemental rate (37% on amounts above $1M). For most high earners, 22% is far below their true marginal rate, which means a meaningful tax bill at filing time unless you're proactively withholding more. Coordinating pre-tax 401(k) contributions and considering options like the mega backdoor Roth matters more at this income level because the tax savings on each pre-tax dollar are larger.
This calculator is an estimate, not tax advice. Pair the result with a realistic monthly budget, and consult a tax professional for guidance specific to your situation.
Frequently asked questions
How do I calculate my take-home pay?
Start with your gross pay, subtract pre-tax deductions (401(k), HSA, qualifying health premiums), then subtract federal income tax based on your filing status and brackets, your state income tax, and FICA (Social Security and Medicare). What's left is your take-home pay. The calculator above does all of this for 2026 in one pass.
What's the difference between gross and net income?
Gross income is total earnings before deductions. Net income — also called take-home pay — is what's left after taxes and pre-tax deductions come out. A salary is usually quoted in gross; what hits your bank account is net.
Does a raise that bumps me into a higher bracket lower my take-home?
No. The U.S. system is marginal — only the portion of your income above the bracket threshold is taxed at the higher rate, not the whole paycheck. A raise into a higher bracket always increases take-home pay; it just means each additional dollar above the threshold is taxed slightly more than the dollar below it.
How much of my paycheck goes to taxes?
It depends on your income, filing status, and state. A typical middle-income household in a moderate-tax state might pay 20–25% of gross to combined federal, state, and FICA. High earners in high-tax states often pay 35–45% effective. The calculator above gives you a specific number using your inputs and 2026 rates.
Do 401(k) contributions reduce my taxable income?
Traditional (pre-tax) 401(k) contributions reduce your taxable income in the year you contribute, lowering federal income tax owed now. Roth 401(k) contributions do not — they're made with after-tax dollars but grow and withdraw tax-free in retirement. Both reduce the cash that hits your checking account each pay period.
Why is my bonus taxed so much?
Bonuses are withheld at the flat 22% federal supplemental rate (37% on amounts above $1M), plus state supplemental, FICA, and any local tax. That withholding is often higher than your normal paycheck percentage, which makes it feel like the bonus is “taxed more.” It isn't — at filing time, your actual tax is calculated on your full annual income at your real marginal rate, and any over-withholding comes back as a refund.
This calculator and its explanations are educational and give estimates only — not investment, tax or legal advice. Real returns, inflation and tax outcomes vary; talk to a qualified professional about your own situation.