About Our Methodology

Data Sources

All tax data used in PaycheckSense is sourced from official government publications:

• Federal income tax brackets: IRS Revenue Procedure 2025-32 (2026 inflation adjustments) and IRS Publication 15-T (Federal Income Tax Withholding Methods)
• Standard deductions: IRS Rev. Proc. 2025-32 - $16,100 (Single), $32,200 (MFJ), $24,150 (HoH) for 2026
• FICA rates and wage bases: Social Security Administration (SSA) Fact Sheet for 2026 - $184,500 Social Security wage base, 6.2% SS rate, 1.45% Medicare rate
• State income tax brackets: Official state department of revenue / taxation websites for all 50 states and D.C.
• State standard deductions: Individual state revenue publications and CCH/Thomson Reuters state tax guides

Data is reviewed and updated at the start of each calendar year and whenever significant legislative changes are enacted.

Federal Income Tax Calculation

We use the standard progressive bracket method:

1. Gross annual income is determined from your input (salary, hourly rate × hours, or other frequency converted to annual).
2. Pre-tax deductions (401k, HSA, FSA) are subtracted from gross income to arrive at adjusted gross income (AGI) for withholding purposes.
3. Standard deduction for your filing status is subtracted from AGI to arrive at federal taxable income.
4. Federal taxable income is applied against the 2026 progressive brackets. Each bracket rate applies only to the income within that bracket (marginal taxation).
5. A Child Tax Credit of $2,000 per qualifying child (phase-out at $400,000 MFJ / $200,000 Single) is subtracted from the computed federal tax.

FICA Tax Calculation

FICA (Federal Insurance Contributions Act) consists of two components:

• Social Security: 6.2% on wages up to the Social Security wage base ($184,500 for 2026). Wages above this limit are exempt from Social Security tax.
• Medicare: 1.45% on all wages, with an additional 0.9% Additional Medicare Tax (AMT) on wages exceeding $200,000 (single) or $250,000 (MFJ). Note: For withholding purposes, employers withhold the additional 0.9% once wages exceed $200,000 regardless of filing status.

FICA is calculated on gross wages before the standard deduction but after certain pre-tax benefit deductions. Employer-sponsored health insurance premiums and Section 125 cafeteria plan deductions typically reduce FICA-taxable wages; however, 401(k) contributions do not reduce FICA wages.

State Income Tax Calculation

Each state's calculation follows the same progressive logic as federal, using the state's own brackets and standard deduction (or exemption). Key variations:

• No-income-tax states (TX, FL, WA, NV, WY, SD, AK, TN, NH): State tax = $0
• Flat-rate states (CO, IL, IN, KY, MA, MI, NC, PA, UT): Single rate applied to taxable income
• Progressive states: Multiple brackets with state-specific deductions and exemptions
• State taxable income: Most states start from federal AGI and apply state-specific adjustments. We apply the state standard deduction (or personal exemption) where applicable.

Note: Local/city income taxes (NYC, Philadelphia, etc.) are not currently included in calculations. This is disclosed on all relevant pages.

Pay Period Conversion

Annual tax totals are divided by the appropriate number of pay periods:

Known Limitations

• Local and city income taxes are not modeled
• State Alternative Minimum Tax (AMT) is not modeled
• Itemized deductions are not supported (standard deduction only)
• Self-employment taxes (Schedule SE) are not included in the standard calculator
• State-specific tax credits beyond the standard deduction are not modeled
• Reciprocity agreements between states (live in one state, work in another) are not handled

Feedback & Corrections

Found an error in our data or methodology? We take accuracy seriously. Please contact us with the specific state, salary amount, and expected vs. actual result. We typically address data corrections within 48 hours.