Last reviewed . Tax years supported: 2025 and 2026.
How is a paycheck calculated?
Every payroll system works in the same order, and so does this calculator:
- Gross pay for the period.
- Pre-tax deductions. A traditional 401(k) lowers income-tax wages but not Social Security or Medicare wages. A Section 125 health premium lowers both.
- Wage bases. Each tax gets its own taxable wages, capped where the law caps them (Social Security, FUTA and state unemployment).
- FICA. Social Security and Medicare are flat rates on those wages.
- Income-tax withholding. Federal tax uses the IRS percentage method, and state tax uses that state's method.
- Net pay is gross pay minus the employee's taxes and deductions.
These figures come from the same payroll engine that runs ClearBooks payroll. It uses tax tables transcribed from IRS Publication 15-T and California's DE 44, not an approximation.
How is federal income tax withholding calculated from a W-4?
For a 2020-or-later Form W-4, the IRS percentage method for automated payroll systems (Worksheet 1A in Publication 15-T) annualizes the paycheck. It adds Step 4(a) other income, and subtracts Step 4(b) deductions plus, when the Step 2 box is unchecked, a fixed amount of $8,600 ($12,900 if married filing jointly). Tax on that annual figure comes from the annual table, is divided back to one paycheck, and is reduced by the Step 3 credit for the period. Step 4(c) extra withholding is then added.
The default example, worked by hand for 2026: $2,884.62 × 26 = $75,000.12, less $8,600, is $66,400.12. The single table gives $5,800 + 22% × ($66,400.12 − $57,900) = $7,670.03 a year, or $295.00 per paycheck, which matches the result above. Checking the Step 2 box uses the higher-rate table and skips the $8,600 adjustment. That's what the IRS intends when a household has more than one job.
What are the Social Security and Medicare rates for 2025 and 2026?
Social Security is 6.2% from the employee and 6.2% from the employer, on wages up to the annual wage base: $176,100 for 2025 and $184,500 for 2026. Medicare is 1.45% each, with no cap. Once an employee's wages for the year pass $200,000, the employer must also withhold the 0.9% Additional Medicare Tax, which has no employer match. Enter the wages already paid this year to see where a paycheck crosses the cap.
How are California, Arizona and Texas taxes handled?
- California withholding follows the EDD's DE 44 "Method B" exact calculation. It uses the DE 4 filing status, regular allowances and estimated-deduction allowances, with the per-period tables for each pay frequency. California SDI is withheld from the employee at 1.2% for 2025 and 1.3% for 2026, with no wage ceiling. The employer pays unemployment insurance (3.4% for new employers on the first $7,000) plus the 0.1% Employment Training Tax.
- Arizona withholding is the percentage the employee elects on Form A-4, from 0.5% to 3.5%. With no A-4 on file it's 2.0%. A new employer pays 2.0% unemployment tax on the first $8,000.
- Texas has no income tax on wages. A new employer generally pays 2.7% unemployment tax on the first $9,000.
ClearBooks' payroll engine has rules for only these three states, so they're the only ones offered. If we showed a figure for another state, it would be a guess.
What does the employer pay on top of gross pay?
The employer matches Social Security and Medicare. It also pays federal unemployment tax (FUTA), which is 6.0% on the first $7,000 of wages, less a credit of up to 5.4% for paying state unemployment on time, so usually 0.6%. In a credit reduction state the credit is smaller, and the difference is due with Form 940 after year end. For 2025 that applies to California (an extra 1.2%). The 2026 reductions aren't final until November 10, 2026. Add state unemployment and, in California, ETT, and you have the true cost of a hire. Use your own rate notice for unemployment: rates change once you have a history.
Why can I only choose 2025 or 2026?
Withholding uses the tables for the year the wages are paid, not the year they were earned. The engine only has tables it has transcribed from published final sources: Publication 15-T, DE 44 and the state agencies' notices. It refuses to compute any other year rather than reuse old tables. That refusal is shown under the year picker. Once the 2027 publications are final, the engine adds that year.
What does this calculator leave out?
It estimates one regular paycheck. It doesn't cover bonuses and other supplemental pay, local or city taxes, exempt employees, garnishments, post-tax deductions, other states, or year-end true-ups. The Social Security, FUTA and unemployment caps use the year-to-date wages you enter, and assume none of those wages were pre-tax deductions. Withholding is an estimate of the employee's tax, not the final amount; the return settles the difference.
Frequently asked questions
How much federal tax is withheld from a $75,000 salary paid every two weeks?
For 2026, a single employee with a standard 2020-or-later W-4 (no Step 2, 3 or 4 entries) has $295.00 of federal income tax withheld from each $2,884.62 biweekly paycheck. Social Security is $178.85 and Medicare is $41.83.
What is the Social Security wage base for 2026?
$184,500 (it was $176,100 for 2025). Social Security tax of 6.2% each for the employee and employer stops once wages for the year reach it. Medicare has no wage base.
Does a 401(k) contribution reduce Social Security and Medicare tax?
No. A traditional 401(k) deferral reduces wages for federal income tax withholding but not for Social Security or Medicare. A Section 125 cafeteria-plan health premium reduces both.
What is California SDI and how much is it?
State Disability Insurance is withheld from California employees' wages to fund disability and paid family leave benefits. The rate is 1.2% for 2025 and 1.3% for 2026, and since 2024 there is no wage ceiling.
Do employees in Texas pay state income tax?
No. Texas has no income tax on wages, so nothing is withheld for the state. Employers still pay Texas unemployment tax on the first $9,000 of each employee's wages.
Is this calculator tax advice?
No. It's an estimate of one paycheck under published withholding rules. Withholding is not the employee's final tax, and your own rates, benefits and circumstances may differ. Confirm with a payroll professional or CPA.
Sources
- IRS Publication 15-T (2026), Federal Income Tax Withholding Methods
- IRS Publication 15 (2026), Employer's Tax Guide
- IRS Publication 15-T (2025)
- California EDD, DE 44 California Employer's Guide (2026)
- Arizona DOR, Form A-4 withholding election
- Arizona DES, unemployment tax rates
- Texas Workforce Commission, unemployment tax rates
This calculator estimates withholding for planning. It is not tax or legal advice. Related: ClearBooks payroll, equity and cap table and how to account for a SAFE.