How we calculate take-home pay

Salary Codex computes pay with its own rules engine. Every parameter comes from a primary source — a statute, a revenue procedure or a tax authority's own table — and every release is tested against official tables before it ships. The list of documents we rely on is on the data sources page.

Order of operations

1. Gross salary, annual.
2. Pre-tax deductions. Traditional 401(k), 403(b) and 457(b) deferrals reduce federal taxable wages but not Social Security and Medicare wages. Section 125 health premiums, payroll HSA and health FSA contributions and qualified commuter benefits reduce both.
3. Federal adjusted gross income: wages after those deductions (a wage-only household is assumed).
4. Deductions: the standard deduction for the filing status, plus the additional amount for age 65 or blindness, and the 2025–2028 senior deduction ($6,000 per person aged 65+, reduced by 6% of income above $75,000 or $150,000 joint). Also for 2025–2028, the deductions for qualified tips (up to $25,000) and the overtime premium (up to $12,500, or $25,000 joint), each reduced by $100 for every full $1,000 of income above $150,000 ($300,000 joint) and not available when married filing separately, exactly as on Schedule 1-A. They lower federal income tax only; Social Security and Medicare still apply. States that start from federal taxable income pass them through (Iowa, Montana, North Dakota; Colorado for tips, and for overtime only in 2025), and Idaho and Oregon allow them on their own returns.
5. Federal income tax. When taxable income is under $100,000 we use the IRS Tax Table, exactly as Form 1040 line 16 requires: tax is computed at the midpoint of the $50 row (smaller rows below $3,000) and rounded to whole dollars. At $100,000 and above we apply the rate schedule. This is why our federal figure can differ by a few dollars from calculators that apply the schedule to every income.
6. Credits. The child tax credit ($2,200 per child under 17 in 2025 and 2026; $500 per other dependent), reduced by $50 for each $1,000 of income above $200,000 ($400,000 joint), applied against tax; the refundable part up to $1,700 per child and 15% of earned income above $2,500 (with three or more children, Social Security and Medicare tax withheld minus the earned income credit when that is higher, Schedule 8812 Part II-B). The earned income credit is read from the IRS EIC Table for the filing status and number of children, using wages as earned income; without a qualifying child it requires an age of 25 to 64. State earned income credits that are a share of the federal credit follow, including the states that extend them to younger or older workers or to ITIN filers. State worker credits with their own formula are figured on the state's own form: California's CalEITC (FTB 3514 EITC Table, from age 18) and Young Child Tax Credit (a child under 6), Minnesota's Child and Working Family Credits (Schedule M1CWFC) and Washington's Working Families Tax Credit, a sales tax refund claimed from the Department of Revenue.
7. FICA. Social Security at 6.2% up to the wage base ($184,500 in 2026), Medicare at 1.45% on all wages, and Additional Medicare at 0.9% above the threshold for the filing status.
8. State. Each state's module starts from the income definition the state uses — federal AGI, federal taxable income or its own (Pennsylvania taxes 401(k) deferrals) — and applies its rates, deductions, exemptions, credits and employee payroll contributions. Where counties or cities tax wages (13 states: Alabama, Colorado, Delaware, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, New York, Ohio, Oregon and Pennsylvania), you choose the place and its local tax is added.
9. Marginal rate. The share of the next $1,000 of gross pay that goes to tax: we run the whole calculation again with $1,000 more and compare total tax — federal, FICA, state and local, refundable credits included. That way the phase-ins and phase-outs of the earned income credit, the refundable child tax credit and state credits, the $50-per-$1,000 child tax credit reduction and the senior deduction phase-out all show up, which a bracket rate alone misses. The federal bracket is shown next to it.

Filing with an ITIN

Under advanced options you can say that you, or your spouse on a joint return, file with an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number valid for work, and how many of your children have an ITIN instead of a Social Security number. The calculation then follows the 2025 Form 1040 instructions, the Schedule 8812 instructions and IRS Publication 596:

• No federal earned income credit when you or your spouse file with an ITIN. A child with an ITIN does not count for the credit; if none of your children has a Social Security number, the credit is figured as for a worker without a qualifying child, so it needs an age of 25 to 64.
• Child tax credit: from 2025 it needs a valid Social Security number for you or, on a joint return, at least one spouse, and for each child it counts. Otherwise the child counts for the $500 credit for other dependents, which can only reduce tax and has no refundable part.
• Senior, tips and overtime deductions apply only to a person with a valid Social Security number: on a joint return, the spouse who is 65 or older or who received the tips or overtime pay.
• State credits. California (CalEITC and the Young Child Tax Credit), Colorado, Illinois (and its child tax credit), Maine, Maryland (state and county credits), Minnesota, New Mexico, Oregon, Vermont, Washington and the District of Columbia pay their worker credit to ITIN filers, as if they had a Social Security number, and count children with an ITIN. In Illinois, Maine, Maryland and New Mexico this combines with the state's wider age range; in Colorado it does not, because the route for workers under 25 needs a Social Security number. The other states' earned income credits are a share of the federal credit, so they are not available to ITIN filers and count only children with a Social Security number.
• Other state rules. North Carolina's child deduction applies only to children who count for the federal child tax credit. Oklahoma figures its credit under the 2020 federal rules, which give no credit to a worker whose qualifying children all lack a Social Security number.

A child with an ITIN is assumed to be a U.S. resident, which the $500 credit requires.

Annual tax, not paycheck withholding

The figures are the tax you owe for the year, the number that ends up on your return. Paycheck withholding (IRS Publication 15-T and state withholding tables) is an estimate of it and can differ; a dedicated withholding view is in build.

Tests

State modules

Released (51): Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.

Not yet included

• Some local taxes: Ohio school district income taxes and the credit for municipal tax paid where you work, Michigan cities other than Detroit, Pennsylvania township and borough earned income taxes, and Kentucky occupational license taxes outside Louisville and Lexington.
• The OBBBA deduction for car-loan interest, and state tax breaks for tips or overtime that a state wrote into its own law rather than inheriting from federal taxable income.
• Income other than wages.

Updates and errors

Rules are updated when a government publishes a change; the version and verification date appear on every calculator. If a result does not match your return or payslip, tell us — corrections ship as a new rules version with a new verification date.

Estimates only. Not tax, legal or financial advice.