Your paycheck has two numbers that matter. Gross pay is what your job promises you. Net pay, or take-home, is what actually lands in your bank account after federal income tax, payroll taxes, and any state or local taxes come out. Understanding the gap helps you budget, negotiate a salary, or compare job offers across states.
Gross pay vs net pay
Gross pay is your salary or hourly wages before any deductions. From that, your employer withholds federal income tax based on your W-4, plus FICA payroll taxes for Social Security and Medicare. If your state has an income tax, that comes out too, along with anything you contribute pre-tax to a 401(k), HSA, or health insurance premiums.
The math looks like this: gross pay minus pre-tax deductions equals taxable wages, then federal and state income tax come out, and FICA is applied to most of your gross. What is left is your net pay.
Federal income tax brackets for 2025
The United States uses a progressive system, so each slice of your income is taxed at a different rate. For single filers in tax year 2025, the brackets are:
- 10% on income up to $11,925
- 12% from $11,926 to $48,475
- 22% from $48,476 to $103,350
- 24% from $103,351 to $197,300
- 32% from $197,301 to $250,525
- 35% from $250,526 to $626,350
- 37% above $626,350
For married couples filing jointly, the thresholds are roughly doubled. The 2025 standard deduction is $15,000 for single filers and $30,000 for married filing jointly, per the IRS inflation adjustments for 2025.
A common mistake is thinking that crossing into the next bracket taxes all your income at the higher rate. Only the dollars inside that bracket pay that rate, so your effective rate is almost always lower than your top marginal rate.
FICA: Social Security and Medicare
The United States does not have a “national insurance” line item like the UK. Instead, FICA covers Social Security and Medicare. For 2025:
- Social Security tax is 6.2% on wages up to the wage base of $176,100, per the Social Security Administration.
- Medicare tax is 1.45% on all wages, with no cap.
- An Additional Medicare Tax of 0.9% applies to wages above $200,000 for single filers.
Your employer matches the Social Security and base Medicare portions. If you are self-employed, you pay both halves through SECA, totaling 15.3% on the relevant base. The mechanics for employees are described in IRS Publication 15.
State income taxes
Federal tax is only part of the picture. Most states also tax wages, with rates ranging from under 3% to over 13%. Nine states have no broad income tax on wages, including Texas, Florida, Washington, and Tennessee. Two people earning the same salary can end up with very different take-home pay depending on where they live. To see how your state stacks up, try the National Calculators state comparison tool.
How to estimate your take-home pay
A reasonable order of operations:
- Start with annual gross pay.
- Subtract pre-tax contributions like 401(k) and HSA.
- Apply the federal brackets to taxable income (gross minus the standard or itemized deduction).
- Subtract FICA at 7.65% on most of your gross.
- Subtract state and local tax if applicable.
- Divide by your number of pay periods to get a per-paycheck estimate.
If you want to skip the spreadsheet, the National Calculators paycheck calculator handles the brackets, FICA, and state rules for you.
FAQ
Is my whole salary taxed at my top bracket rate?
No. The progressive system taxes each slice of income separately, so your effective rate is almost always meaningfully lower than your top marginal rate.
What is the 2025 Social Security wage base?
It is $176,100. Earnings above that are not subject to the 6.2% Social Security tax, though the 1.45% Medicare tax still applies and an extra 0.9% kicks in above $200,000 for single filers.
Why is my net pay different from my coworker’s at the same salary?
Withholding depends on your W-4, retirement contributions, health insurance choices, and state of residence, so two identical salaries can produce very different take-home amounts.