How FICA and take-home pay work

FICA is two payroll taxes with their own bases, not a guess and not a bracket. Social Security is 6.2 percent of wages up to an annual wage base. Medicare is 1.45 percent of this check with no cap in the ordinary case.

On a $2,000 check that is still under the base:

$$0.062 \times 2{,}000 = 124 \qquad 0.0145 \times 2{,}000 = 29$$

Social Security is $124. Medicare is $29. FICA is $153.

Income tax is the other slice, and it is not FICA. Federal withholding depends on filing status, the W-4, and the IRS percentage method. The paycheck calculator on this page does not run that table. You type a federal percent and, if you want, a state percent, which is what a stub already printed or what a class wants to hold still while FICA moves.

Twelve percent of $2,000 is $240. State is $0 on the first sheet. Take-home is $2000 - 153 - 240 = 1607$, so $1,607, which is 80.35 percent of gross. That is net pay: what lands in the account, not the tax bill for the year.

The wage base is an input because the statutory figure is reset each year. The default here is $168,600. Put the figure your stub or your course is using.

A real payroll file charges 6.2 percent on every dollar until year-to-date wages hit the base, then Social Security on later checks is zero. This calculator does not ask for year-to-date. It takes the annual 6.2 percent of wages up to the base and spreads that cost evenly across the year's checks, so the number you see is the average check in a year of equal pay.

On $2,000 a week, 52 checks, annual wages are $104,000, which sits under $168,600, so the even spread and the January-to-December file print the same Social Security: $124 a check. The two methods part once annual wages clear the base.

A $4,000 weekly check annualises to $208,000. Annual Social Security is 6.2 percent of the base:

$$0.062 \times 168{,}600 = 10{,}453.20$$

Spread across 52 checks that is $201.02 on every check. Without the cap, Social Security on this check would be $248. Medicare has no cap here: $58. At 22 percent federal and no state, take-home is $2,860.98, or 71.52 percent of gross.

If you are reading a December stub after the base is used up, type the Social Security line off the stub rather than using this average. The average is the right picture of a year of equal pay. It is the wrong picture of one late-year check.

Federal withholding is an estimate sent in during the year. The marginal tax rate is the rate on the next dollar of taxable income. The effective tax rate is total tax over total income. None of those three has to equal the percent you type here.

A 12 percent withholding on $2,000 is $240 this check. That can be close to the eventual federal bill, or not, depending on deductions, credits, and whether pay is even across the year. Treat the federal and state sliders as a way to see how take-home moves when withholding moves, not as a filing.

Adding 5 percent state withholding takes another $100 and leaves $1,507, or 75.35 percent of gross. FICA did not change. The state line did.

Gross pay against net pay is the pair people mix up on an offer letter. Gross is what a lender usually wants for debt-to-income, because that ratio is written on gross monthly income. A budget spends net. Running a 50/30/20 split on gross prints buckets the account cannot fund, which is why the budget split calculator splits take-home.

It is not a W-4 engine, not a state-tax table, and not the additional 0.9 percent Medicare surtax that applies to high earned income. It does not pretax a 401(k) deferral before FICA: in the United States, FICA is charged on wages before that deferral, which is why a match and a paycheck are different objects. The employer match calculator is the next page if the question is how much of pay the plan will copy.

For the household plan that the leftover money has to live inside, see how budgeting works. The figures throughout are a teaching sheet: a $2,000 weekly check, 12 percent federal, no state, a $168,600 wage base, then the same check with 5 percent state, then a $4,000 weekly check that clears the base. This is educational material, not financial advice, and it is not a substitute for a payroll system or a tax return.