PaycheckBay

How PaycheckBay calculates your paycheck

Every result follows the same eight steps, using the 2026 tables as of October 28, 2026. The order matters: a few states (Alabama, Oregon) subtract federal withholding before computing their own tax, so federal always runs first.

  1. Gross pay. Annual salary as entered, or hourly rate × hours per week × 52. Divided by 52, 26, 24 or 12 pay periods.
  2. Pre-tax deductions. 401(k)/403(b) contributions reduce federal and (in most states) state taxable wages but not Social Security or Medicare. Health premiums and HSA/FSA contributions under a Section 125 plan reduce all of them. Pennsylvania taxes 401(k) deferrals.
  3. Federal income tax. IRS Publication 15-T, Worksheet 1A (percentage method for automated payroll, 2020-or-later W-4). If the Step 2 box is not checked, $12,900 (married filing jointly) or $8,600 (others) is subtracted first, which is how the $16,100 / $32,200 standard deduction is built into withholding. Step 3 credits reduce the annual tax; Step 4(c) extra withholding is added per paycheck.
  4. Social Security. 6.2% of FICA wages up to $184,500 for 2026.
  5. Medicare. 1.45% of all FICA wages, plus 0.9% on wages above $200,000.
  6. State income tax. Each state's published withholding method: no tax (9 states), a flat rate after the state's deduction and allowances, a bracket schedule, or the state's own formula where it is unusual (for example California's low-income exemption and allowance credit, Utah's phased credit, Arizona's employee-elected percentage). We use withholding tables, not tax-return brackets, when the two differ (North Carolina withholds 4.09% on a 3.99% tax, for instance).
  7. Local tax. Only where you choose a locality: New York City, Yonkers, Philadelphia, Detroit, Maryland and Indiana counties, and others listed on the state page. Many Ohio, Pennsylvania, Kentucky and Alabama localities also tax wages; where we have not verified a rate from an official source we say so rather than guess.
  8. State payroll deductions. Employee-paid disability, paid-leave, unemployment and transit contributions with their 2026 caps: California SDI, New York PFL and DBL, New Jersey UI/WF/TDI/FLI, Washington PFML and WA Cares, Oregon transit and paid leave, Massachusetts PFML, Colorado FAMLI, Connecticut paid leave, Rhode Island TDI, Hawaii TDI and others.

What we assume

Unless you change it: single filer, Step 2 unchecked, no dependents or extra withholding, the state's default allowance count for a single filer, no pre-tax deductions, no local tax. Bonuses, overtime and tips are treated as regular wages. The 2026 federal deductions for tips and overtime from the 2025 tax law are claimed on your tax return and do not change withholding unless you adjust your W-4.

Why your pay stub may differ

Payroll software rounds at each step, and some employers use wage-bracket tables instead of the percentage method. Mid-year rate changes (Georgia, Utah, West Virginia, Arkansas, Idaho and Ohio all changed during 2026) mean early-year stubs can differ from current tables. Year-to-date caps on Social Security and state programs apply per calendar year, so a high earner's later paychecks are larger.

Sources

IRS Publication 15-T (2026); IRS inflation adjustments for tax year 2026; SSA 2026 fact sheet; and each state's revenue department publications, listed with links on every state page. Questions or corrections: contact us.