Translate salary into the paycheck you can spend.

Four things come out before you see it. Federal income tax, withheld under the percentage method using your W-4; Social Security at 6.20% up to the $184,500 wage base; Medicare at 1.45% with no cap at all; and, in most states, state and sometimes local income tax. On top of that come pre-tax deductions like health premiums and 401(k) contributions, which lower your tax but also lower the deposit. A federal-only take-home rate in the high seventies to low eighties as a percentage of gross is normal.

There are no allowances any more — the form was redesigned in 2020. Step 3 claims dependent credits, which directly reduce the annual tax your employer withholds. Step 4(a) adds other income so more is withheld, 4(b) adds deductions above the standard deduction so less is withheld, and 4(c) adds a flat dollar amount to every paycheck. Step 2 is for a second job or a working spouse, and skipping it is the single most common cause of under-withholding in two-income households.

The marginal rate is the bracket your last dollar falls into — 22%, 24%, 32% and so on. The effective rate is total tax divided by total income, and it is always much lower because the brackets are progressive: only the slice of income inside each band is taxed at that band's rate. Someone in the 24% bracket often has an effective federal rate near 13%. Getting a raise never costs you money by "pushing you into a higher bracket" — only the extra dollars are taxed higher.

For roughly nine out of ten filers, yes. For tax year 2026 it is $16,100 for single filers, $32,200 filing jointly and $24,150 for head of household. Itemizing only pays if your mortgage interest, state and local taxes within the cap, and charitable giving together exceed that figure. These amounts are indexed and change every year — always check the current-year number before filing.

It is a calendar artefact, not an error. Biweekly pay produces 26 paydays in most years, but 52 weeks is 364 days, so the extra day or two accumulates and eventually a year contains 27 paydays. Employers handle it two ways: keep the per-check amount the same, so you receive one extra check of gross pay that year, or divide the same annual salary across 27 checks, so each one is slightly smaller. Both are legal; which one applies is a payroll policy question. Watch annual caps such as 401(k) deferrals if you get the extra check.

It is not taxed at 22% — it is withheld at 22%. The IRS permits employers to apply a flat supplemental withholding rate to bonuses and other supplemental wages paid separately from regular pay, and 22% is that rate for amounts under $1 million. Your bonus is ordinary income like everything else; the difference between the 22% withheld and your actual marginal rate is settled at filing, as a refund if your rate is lower or a balance due if it is higher.

No, on three counts. First, it is a deduction claimed on the return, not an exemption from withholding: the money still comes out of your paycheck and returns at filing. Second, it only covers the FLSA-required PREMIUM — the extra half of time-and-a-half — not the base pay for those hours. Third, it is capped at $12,500 ($25,000 filing jointly) and phases out by $100 for every $1,000 of MAGI above $150,000 single or $300,000 joint. Social Security, Medicare and any state income tax apply to every dollar regardless.

Qualified tips are deductible up to $25,000 per return, with the same MAGI phase-out as the overtime deduction: $100 of deduction lost per $1,000 of income above the threshold. The tips must be voluntary, received in an occupation that customarily receives tips, and reported — cash tips you never reported to your employer do not qualify. As with overtime, payroll taxes still apply, and the provision is temporary, covering tax years 2025 through 2028.

Start at 25% to 30% of net profit and adjust once you know your bracket. The self-employment tax alone is 12.4% Social Security plus 2.9% Medicare on 92.35% of profit — about 14.1% of profit before income tax has been touched. Federal income tax then stacks on top at your marginal rate, and state tax on top of that. The consolation is that half the self-employment tax is deductible above the line.

If you expect to owe a meaningful amount at filing and are not having enough withheld elsewhere, you generally must pay estimated tax during the year using Form 1040-ES, normally in four instalments due in April, June, September and the following January. Missing them can trigger an underpayment penalty even if you pay the full balance on time at filing. If you also hold a W-2 job, an alternative to writing quarterly checks is simply increasing withholding there through Step 4(c) of your W-4 — withholding is treated as paid evenly through the year, which can cure an earlier shortfall.

Because payroll taxes are shared and benefits are extra. The employer matches Social Security at 6.20% and Medicare at 1.45%, pays federal unemployment tax at an effective 0.6% on the first $7,000 of wages, and pays state unemployment insurance at a rate set by the state and the employer's own claims history. Add health premiums, any retirement match and workers' compensation and a typical fully loaded cost lands somewhere between 1.15 and 1.35 times base salary.

Work backwards from the salary you want, then add what an employer would otherwise absorb. Roughly: take the target annual income, add self-employment tax, health coverage and retirement saving, and divide by billable hours — which for most independents is 1,000 to 1,400 a year, not 2,080, because selling, admin, sick days and holidays are unpaid. That arithmetic is why a $50 an hour freelance rate does not remotely match a $100,000 salary.

An extra 0.9% on wages and self-employment earnings above $200,000 for single and head-of-household filers, $250,000 filing jointly and $125,000 filing separately. It applies to the employee or self-employed person only — employers do not match it. Employers must begin withholding it once wages pass $200,000 for the year, which means a jointly filing couple can be over- or under-withheld and reconcile at filing.