Question 1

How is federal income tax calculated?

Accepted Answer

Federal tax is calculated using progressive tax brackets. Income within each bracket is taxed at that bracket's rate. Higher income pushes more earnings into higher brackets.

Question 2

What is Social Security tax?

Accepted Answer

Social Security tax is 6.2% of gross wages up to the Social Security wage base ($160,200 in 2024). Your employer matches this amount.

Question 3

What is Medicare tax?

Accepted Answer

Medicare tax is 1.45% of all wages. An additional 0.9% applies to wages over $200,000. Employers also pay 1.45%.

Question 4

What are pre-tax deductions?

Accepted Answer

Pre-tax deductions such as 401(k) contributions, HSA contributions, and employer health insurance reduce your taxable income before taxes are calculated.

Question 5

Why is my actual paycheck different?

Accepted Answer

This calculator provides estimates. Actual paychecks vary based on W-4 elections, state and local taxes, actual benefit deductions, and employer-specific payroll settings.

Question 6

What is an effective tax rate?

Accepted Answer

Your effective tax rate is the average rate you pay on all your income. It is lower than your marginal tax rate because lower income is taxed at lower rates in the progressive tax system.

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