Where Does Your Paycheck Go?
FICA · Federal Taxes · State Income Tax
Getting a job offer and wondering what you'll actually bring home? The gap between your gross salary and your net take-home pay trips up millions of Americans every year — and in high-tax states like California or New York, that gap can be genuinely shocking.
How Your Paycheck is Calculated
Every paycheck follows the same basic equation. It's not complicated once you see it laid out clearly:
Net Pay = Gross Pay − Federal Tax − State Tax − FICA − Pre-Tax Deductions
- Gross Pay: Your total earnings before anything is removed.
- Federal Income Tax: Calculated using progressive brackets based on your taxable income.
- State Income Tax: Depends entirely on where you live. Nine states collect zero. California goes up to 13.3%.
- FICA: Social Security (6.2%) and Medicare (1.45%).
The Power of Pre-Tax Deductions
Pre-tax deductions (like 401(k) contributions, HSA deposits, and health insurance premiums) come out before taxes are calculated. This means they reduce your taxable income, lowering your tax bill at the exact same time you are saving for retirement or paying for healthcare.
FICA Taxes: Social Security & Medicare
FICA stands for Federal Insurance Contributions Act. These are mandatory — there's no way to reduce or avoid them through deductions or filing status (unless you are a non-resident alien on a specific visa). Both you and your employer each pay half of the total FICA obligation.
If you earn $184,500 or more in 2026, your Social Security withholding stops once you hit that threshold. Your last paychecks of the year will be noticeably larger. However, if you are a freelancer, you must pay the full 15.3% yourself. Check out our Self Employment Tax Calculator for details.
State Taxes: Texas vs California
State income tax is the most variable part of your paycheck. On a $100,000 salary, a single filer in California will pay approximately $5,750 in state income tax and another $1,400 in SDI. In Texas, Florida, or Nevada, they will pay $0.
That's over $500 more per month in take-home pay just from living in Texas instead of California. This is why it is so crucial to calculate your exact take-home pay before accepting a job offer in a new state.
Hourly Workers & Overtime
If you are paid by the hour, calculating your annual take-home pay requires multiplying your rate by the actual hours you work (usually 2,080 for a full-time year). If you work overtime, you must calculate that separately at 1.5x. For precise overtime math, use our Time and a Half Calculator or our generic Hourly to Salary Converter.