Question 1

What is the difference between gross pay and net pay?

Accepted Answer

Gross pay is your total earnings before any deductions — the amount agreed in your employment contract. Net pay (take-home pay) is what you actually receive after all deductions including taxes, Social Security, Medicare, health insurance premiums, and retirement contributions. In the US, net pay is typically 60–75% of gross pay depending on tax bracket and deductions.

Question 2

What are FICA taxes?

Accepted Answer

FICA stands for Federal Insurance Contributions Act. It includes Social Security (6.2% of wages up to an annual wage base, typically $168,600 in 2024) and Medicare (1.45% with no income limit, plus an additional 0.9% for income over $200,000 for individuals). Employers also pay matching FICA contributions. Self-employed individuals pay both the employee and employer portions (15.3% total).

Question 3

How are federal income tax withholdings calculated?

Accepted Answer

Federal income tax withholding is based on your W-4 elections, filing status, and the IRS tax brackets. Unlike flat rates, the US uses a progressive system where different portions of income are taxed at different rates (10%, 12%, 22%, 24%, 32%, 35%, 37% for 2024). This calculator uses a simplified flat percentage rate for estimation; your actual withholding depends on your W-4.

Question 4

What is a pre-tax deduction?

Accepted Answer

Pre-tax deductions reduce your taxable income before taxes are calculated, lowering your tax burden. Common pre-tax deductions include traditional 401(k) contributions, health insurance premiums (employer-sponsored), HSA and FSA contributions, and commuter benefits. In contrast, Roth 401(k) contributions are post-tax. This calculator treats all deductions as post-tax for simplicity.

Question 5

Why does this calculator show estimates only?

Accepted Answer

Tax calculations are highly complex and vary by federal and state law, filing status, number of dependents, pre-tax benefits, tax credits, and individual W-4 elections. This tool provides educational estimates using simple flat-rate assumptions. For accurate paycheck calculations, use your employer's HR system, a professional tax preparer, or the IRS Tax Withholding Estimator at irs.gov.

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