Step by step for one paycheck
- Gross pay for the period: salary for the period, or hours times rate plus any extra earnings.
- Take off pre-tax deductions, such as 401(k) contributions, to get federal taxable wages.
- Federal income tax: annualize taxable wages, adjust for the W-4, apply the 2026 Annual Percentage Method table for the filing status, and divide back to one paycheck (Publication 15-T, Worksheet 1A).
- Social security: 6.2% of wages until the year's total reaches $184,500.
- Medicare: 1.45% of wages, plus 0.9% on wages over $200,000 in the year.
- State and local income tax, if the state has one.
- Net pay: gross pay less all of the above and any other deductions.
Worked example
A single employee on a 2026 W-4 with the Step 2 box unchecked, paid $2,000 every two weeks, in a state with no income tax:
| Line | Amount |
|---|---|
| Annualized wages ($2,000 × 26) | $52,000.00 |
| Less $8,600 (Worksheet 1A, line 1g) | $43,400.00 |
| Table: $1,240 plus 12% over $19,900 | $4,060.00 a year |
| Federal income tax this paycheck ($4,060 ÷ 26) | $156.15 |
| Social security (6.2%) | $124.00 |
| Medicare (1.45%) | $29.00 |
| Net pay | $1,690.85 |
What the employer pays on top
- Social security and Medicare: a matching 6.2% and 1.45% ($153.00 on the example paycheck).
- FUTA: 6.0% on the first $7,000 of each employee's wages in the year, less a credit of up to 5.4% for state unemployment tax paid, so usually 0.6%.
- State unemployment tax and any other state programs, which vary by state.
What is FUTA? SUTA tax explained Employer payroll tax calculator
Questions
What percentage is taken out for payroll taxes?
FICA is 7.65% for most employees. Federal income tax depends on pay, filing status and the W-4; state tax depends on the state.
Can I calculate payroll taxes myself?
Yes, with Publications 15 and 15-T, or with a calculator that follows them. You still have to deposit the taxes and file the returns; a pay stub doesn't do that.
Sources
- IRS Publication 15-T (2026), Federal Income Tax Withholding Methods
- IRS Publication 15 (2026), (Circular E) Employer's Tax Guide
Official sources checked September 24, 2026. This guide explains how pay documents work; it is not tax or legal advice.
