Take-Home Pay, Explained Line by Line
If you've ever multiplied your hourly rate by your hours and wondered why the deposit was so much smaller, you're looking at the gap between gross pay and take-home pay. Here's exactly what comes out in between.
Gross pay: where it starts
Gross pay is the full amount you earned before anything is taken out — your base hourly rate times hours worked, plus any overtime, shift differentials, and bonuses. It's the big number, and it's not the number that hits your bank account.
FICA: Social Security and Medicare
These are federal payroll taxes that come out of nearly every paycheck at flat rates:
- Social Security: 6.2% of your gross wages (up to an annual wage cap that most hourly workers never reach).
- Medicare: 1.45% of all gross wages, with no cap.
Together that's 7.65% off the top of essentially every dollar you earn. Your employer pays a matching amount, but the 7.65% is the part that comes out of your check.
Federal income tax withholding
This is the one people misunderstand most. Your employer estimates your annual federal income tax based on your W-4 and withholds a slice from each paycheck. The U.S. uses marginal tax brackets — only the income within each bracket is taxed at that bracket's rate, so a raise never causes your whole paycheck to be taxed at a higher rate. Withholding is just a running prepayment; you reconcile the real number when you file.
State (and sometimes local) income tax
Most states withhold their own income tax, ranging from 0% in states like Texas, Florida, and Washington to high single digits elsewhere. A few cities add a local income tax on top. This is why two people with identical pay can take home noticeably different amounts depending on where they work.
Pre-tax deductions
Some money comes out before taxes are calculated, which lowers your taxable income:
- Health, dental, and vision insurance premiums
- 401(k) or 403(b) retirement contributions
- HSA / FSA contributions for medical or dependent-care costs
These reduce your take-home today, but because they're pre-tax, every dollar you contribute costs you less than a dollar of take-home — that's the built-in advantage.
Putting it together
A worker earning $1,600 gross for a pay period might see roughly $122 to FICA, a few hundred to federal and state withholding, and $80–$150 to insurance and retirement — landing somewhere around $1,150–$1,300 take-home, depending heavily on state and W-4 elections. The exact figure is what a calculator is for.
That's the entire journey from "hours × rate" to the number you can actually spend. Once you know which lines apply to you, your paycheck stops being a mystery.
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Open the calculator →This guide is general information, not tax advice. Rates and brackets change; your actual withholding depends on your W-4 and your employer's payroll system. For precise figures, use the IRS Tax Withholding Estimator or a tax professional.