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 2026
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 2026, the brackets are:
- 10% on income up to $12,400
- 12% from $12,401 to $50,400
- 22% from $50,401 to $105,700
- 24% from $105,701 to $201,775
- 32% from $201,776 to $256,225
- 35% from $256,226 to $640,600
- 37% above $640,600
For married couples filing jointly, the thresholds are roughly doubled. The 2026 standard deduction is $16,100 for single filers and $32,200 for married filing jointly, per the IRS inflation adjustments for tax year 2026.
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.
What changed from 2025 to 2026
The seven rates are the same, but the IRS widened every bracket and lifted the standard deduction for 2026, as set out in Revenue Procedure 2025-32. The 22 percent band for a single filer now starts at $50,401 rather than $48,476, and the standard deduction rose by $1,100 to $16,100. These yearly adjustments are meant to stop inflation quietly pushing people into higher brackets, an effect known as bracket creep. The practical result is that an unchanged salary keeps a little more of itself in 2026 than it did in 2025. On the payroll side, the Social Security wage base rose to $184,500, so higher earners pay the 6.2 percent Social Security tax on a slightly larger slice of pay before the cap takes over.
New deductions for 2026: tips, overtime and seniors
The One Big Beautiful Bill added three deductions that can lower the taxable-income figure the brackets above are applied to. All three run for tax years 2025 through 2028, are claimed on the new Schedule 1-A, and are open to people who take the standard deduction as well as those who itemize, per the IRS guidance on new and enhanced deductions for individuals.
- No tax on tips. Workers in occupations the IRS lists as customarily tipped can deduct up to $25,000 of qualified tips reported on a W-2, 1099 or Form 4137. The deduction phases out once modified adjusted gross income passes $150,000 for single filers, or $300,000 for a married couple filing jointly.
- No tax on overtime. You can deduct the premium half of time-and-a-half overtime required under the Fair Labor Standards Act, up to $12,500 for a single filer or $25,000 filing jointly, with the same $150,000 and $300,000 income phase-out points. Only the extra pay above your normal rate counts, not the whole overtime cheque.
- Senior deduction. Filers aged 65 and over can claim an extra $6,000 each, on top of the standard deduction, tapering away at higher incomes.
None of these change the bracket rates or FICA; they shrink the income the brackets bite on, so a tipped or overtime worker under the income limits keeps more of that pay in 2026 than the raw brackets alone would suggest. For the caps, income limits and worked examples on the first two, see the fuller guide to no tax on tips and overtime.
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 2026:
- Social Security tax is 6.2% on wages up to the wage base of $184,500, per the Social Security Administration 2026 fact sheet.
- 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.
Worked example: $80,000 single filer in 2026
Take a single filer earning $80,000, with no pre-tax 401(k) or HSA contributions, taking the standard deduction:
- Standard deduction of $16,100 brings taxable income to $63,900.
- The 10 percent band covers the first $12,400, which is $1,240.
- The 12 percent band runs from $12,401 to $50,400, taxing $38,000 at 12 percent, which is $4,560.
- The 22 percent band taxes the remaining $13,500 up to $63,900, which is $2,970.
- Federal income tax is $1,240 plus $4,560 plus $2,970, a total of $8,770.
FICA is charged on the full $80,000, not the taxable figure: 6.2 percent for Social Security is $4,960, and 1.45 percent for Medicare is $1,160, so FICA is $6,120. The salary sits below the $184,500 Social Security wage base, so all of it is taxable for that portion.
Adding it up, federal income tax of $8,770 plus FICA of $6,120 is $14,890, leaving $65,110 before any state tax. The effective federal income tax rate is $8,770 divided by $80,000, about 11.0 percent, well below the 22 percent top marginal rate. You can check that division quickly with the percentage calculator, and turn an hourly rate into an annual figure first with the hourly to salary calculator.
Take-home pay across salaries in 2026
The same method applied to a range of salaries, all single filers taking the $16,100 standard deduction, with no pre-tax contributions and before any state tax. FICA is 6.2 percent Social Security plus 1.45 percent Medicare on the full gross, since every figure here sits below the $184,500 Social Security wage base.
| Gross salary | Federal income tax | FICA | Take-home before state | Effective federal rate |
|---|---|---|---|---|
| $40,000 | $2,620 | $3,060 | $34,320 | 6.6% |
| $60,000 | $5,020 | $4,590 | $50,390 | 8.4% |
| $80,000 | $8,770 | $6,120 | $65,110 | 11.0% |
| $100,000 | $13,170 | $7,650 | $79,180 | 13.2% |
| $120,000 | $17,570 | $9,180 | $93,250 | 14.6% |
| $150,000 | $24,734 | $11,475 | $113,791 | 16.5% |
The effective federal income tax rate climbs slowly because each new dollar is taxed at the marginal rate while the rest of your income stays in the lower bands. Even at $150,000 the effective rate is well under 17 percent, a long way below the 24 percent top marginal bracket that salary reaches. State tax, where it applies, sits on top of these figures, which is why the state comparison tool can change the ranking of two otherwise identical offers.
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 2026 Social Security wage base?
It is $184,500, up from $176,100 in 2025. 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.
How much did the standard deduction rise for 2026?
The single standard deduction rose from $15,000 to $16,100, and the married filing jointly figure from $30,000 to $32,200. A higher deduction shields slightly more income from tax, so on the same salary your taxable income, and your federal tax bill, both fall a little compared with 2025.
Are tips and overtime really tax-free in 2026?
Not entirely, but a large slice can be. For 2025 through 2028 you can deduct up to $25,000 of qualified tips and up to $12,500 of the overtime premium ($25,000 jointly), which removes that income from federal income tax. FICA still applies, both deductions phase out above $150,000 of income ($300,000 jointly), and you claim them on Schedule 1-A.
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.
How much federal tax will I owe on $100,000 in 2026?
A single filer taking the standard deduction owes about $13,170 in federal income tax on $100,000, an effective rate near 13.2 percent, plus $7,650 in FICA. That leaves roughly $79,180 before any state tax. Married filing jointly usually owes less on the same income, because the wider joint brackets and the $32,200 standard deduction shield more of it.