HomeArticlesPaycheck Calculator: Easily Calculate Take-Home Pay

Paycheck Calculator: Easily Calculate Take-Home Pay

Although our salary paycheck calculator does much of the heavy lifting, it may be helpful to take a closer look at a few of the calculations that are essential to payroll. Use the paycheck calculator to help you determine your paycheck for hourly wages. First, Choose your weekly hours worked and the calculation method (enter annual salary or ourly wage). Decide if you want to calculate average net income. (if Yes, fill in your tax rate). The result will show immediately below where you can find your is net income daily, weekly, monthly and annual income.

Paycheck Calculator

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What is a paycheck?
A paycheck is how businesses compensate employees for their work. The most common delivery schedules are bi-weekly and semi-monthly, though this varies based on employer preferences and applicable state laws and regulations. Business-specific requirements, such as collective bargaining agreements covering union employees, may also dictate paycheck frequency.

Types of paychecks
Traditionally, employees received printed checks in person or by mail, but more often today, the money is electronically deposited into a bank account. Some employers may also offer optional alternatives to paychecks, such as paycards, which can be advantageous to unbanked workers.

How to read a paycheck?
Unlike withholding certificates and other employment documents, paychecks are pretty easy to decipher. Reading them is simply a matter of making sure the payment information is correct. Information found on a paycheck:

  • Check number;
  • Employer’s name and address;
  • Employee’s name and address;
  • Check date;
  • Payment amount;
  • Employer’s bank account and routing numbers;
  • Check memo (optional);
  • Information found on a pay stub.

How to read a pay stubs?
Most states require employees to receive pay stubs and are typically provided with paychecks. Information found on a pay stubs:

  • Pay period start and end date;
  • Hours worked;
  • Gross pay;
  • Net or take home pay;
  • Federal and state income taxes;
  • Local taxes;
  • Medicare and Social Security taxes;
  • Deductions for benefits;
  • Wage garnishments;
  • Year-to-date totals;
  • Paid time off (PTO) balances.

Actual pay stubs vary based on individual circumstances and the state. Some have specific requirements about the information that has to be included on the pay statement and when it must be delivered to employees.

Understanding paychecks: Withholdings and deductions
When reviewing their first paycheck, those who are new to the workforce may wonder why their take home pay is less than their gross pay. The reason is because of taxes, withholdings and deductions such as these:

Federal income tax withholding
Employers withhold federal income tax from their workers’ pay based on current tax rates and Form W-4, Employee Withholding Certificates. When completing this form, employees typically need to provide their filing status and note if they are claiming any dependents, work multiple jobs or have a spouse who also works (for married filing jointly purposes), or have any other necessary adjustments.

FICA withholding
FICA is a two-part tax. Both employees and employers pay 1.45% for Medicare and 6.2% for Social Security. The latter has a wage base limit of $142,800, which means that after employees earn that much, the tax is no longer deducted from their earnings for the rest of the year. Those with high income may also be subject to Additional Medicare tax, which is 0.9%, paid for only by the employee, not the employer.

State and local tax withholding
State and local taxes vary greatly by geographic region, with some charging much more than others. Examples include:

  • State and local income tax;
  • State unemployment tax (SUTA);
  • Short-term disability;
  • Paid family medical leave.

Benefit deductions
Businesses that offer health insurance, dental insurance, retirement savings plans and other benefits often share the cost with their employees and withhold it from their pay. Depending on the type of benefit and the regulations that apply to it, the deduction may be pretax or post-tax. Pretax is more advantageous to employees because it lowers the individual’s taxable income.

Wage garnishments
Employers may need to deduct garnishments from employee wages if they receive a court order to do so. This can occur if an employee defaults on a loan, has unpaid taxes or is required to pay child support or alimony.

Important Information: The calculators that are provided on this website are only meant to provide general guidance and estimates for informational purposes only. It should not be relied upon to calculate exact taxes, payroll, or other financial data. It may not match your actual results precisely and is not intended to provide tax or legal advice. You should consult with a professional advisor or accountant concerning your specific financial calculations.