How to Estimate Take-Home Pay

Your offer letter says $100,000. Your friend says you'll "lose about a third to taxes." Your dad says "it depends." None of these are useful when you're deciding whether to take the job, move cities, or sign the apartment lease.

Estimating take-home pay isn't hard, but it does require following a specific sequence. Mix up the order — for example, applying federal tax brackets to your gross instead of your taxable income — and you'll be off by thousands. This guide walks through the five-step process with a $100,000 single example, then shows how the math shifts when you change one variable.

The five steps in order

1. Start with gross: Annual salary or wages before any deductions.
2. Subtract pre-tax deductions: Traditional 401(k), HSA, FSA, pre-tax health insurance premiums.
3. Subtract the standard or itemized deduction: Standard for most filers; itemized only if it exceeds the standard.
4. Apply federal income tax brackets: To taxable income, not gross.
5. Apply FICA and state tax: FICA on gross wages (with limits); state tax usually on taxable income similar to federal.

Each step depends on getting the previous one right. Skip ahead and you'll over- or under-estimate.

Step 1: Gross income

Gross is your salary before anything is taken out. For a salaried worker, that's the offer letter number: $100,000 in our example. For hourly workers, multiply your hourly rate by expected annual hours — Salary to Hourly Converter works in reverse for this.

What's not in gross for take-home estimating purposes:

• Employer 401(k) match (it's compensation but doesn't pass through your paycheck as cash)
• Employer-paid health insurance premium (same)
• The employer half of FICA (the employer pays it; you don't see it)

What is in gross:

• Base salary
• Anticipated bonus (handle separately for tax purposes, but include in annual gross)
• Commissions
• Any other regular wage compensation

For our worked example: $100,000 gross.

Step 2: Subtract pre-tax deductions

Pre-tax deductions come off the top before income tax is calculated. The big ones:

• Traditional 401(k) contributions: 2026 limit is $23,500 for under-50, $31,000 with catch-up.
• HSA contributions: $4,300 single / $8,550 family in 2026.
• FSA: Up to $3,200 for healthcare FSA.
• Pre-tax health insurance premium: Often $2,000-6,000/year for the employee share.
• Pre-tax commuter benefits: Up to $325/month in 2026.
• Traditional IRA: Not pre-tax through payroll, but deductible at tax time if you qualify.

These don't all reduce every tax. Specifically:

• 401(k), HSA, FSA, and health premiums reduce both federal income tax and (in most cases) state income tax.
• 401(k) does not reduce FICA (Social Security and Medicare).
• HSA and health premiums do reduce FICA.

For our example, assume our $100k single filer contributes:

• 401(k): $10,000 (a 10% contribution)
• Pre-tax health premium: $2,400
• HSA: $2,000

Pre-tax deductions total: $14,400

This brings federal/state taxable income down toward $85,600, but FICA is calculated on a different base (more on that in step 5).

Step 3: Subtract the standard deduction

The 2026 standard deduction is:

• $14,600 for single filers
• $29,200 for married filing jointly
• $21,900 for head of household

Most people take the standard deduction. You'd only itemize (using Schedule A for things like large mortgage interest, state and local taxes capped at $10,000, big charitable contributions, etc.) if your itemized total exceeds the standard.

For our $100k single example:

• Gross: $100,000
• Less pre-tax deductions: −$14,400
• Less standard deduction: −$14,600
• Federal taxable income: $71,000

Step 4: Apply federal income tax brackets

Federal tax is calculated on a marginal basis — each bracket's rate only applies to dollars within that bracket. Here are the relevant 2026 single-filer brackets (rates apply to taxable income, not gross):

• 10% on income up to about $11,925
• 12% from $11,925 to about $48,475
• 22% from $48,475 to about $103,350
• 24% from $103,350 to about $197,300
• And higher brackets above that

The 22% bracket starts at $47,150 of taxable income for single filers under the post-2026 reset, depending on annual inflation adjustments. For planning purposes, treat the boundary as in the high $40k range.

For our $71,000 taxable income:

• First $11,925 at 10% = $1,193
• Next ~$36,550 at 12% = ~$4,386
• Remaining ~$22,525 at 22% = ~$4,956

Federal income tax: ~$10,535

Our effective federal income tax rate is $10,535 / $100,000 = 10.5% — much lower than the "22% bracket" sounds. This is the most common confusion in take-home math: people see "22% bracket" and assume 22% of their whole paycheck is going to federal tax. It isn't.

Step 5: Apply FICA and state tax

FICA

FICA is two taxes bundled:

• Social Security: 6.2% on wages up to the 2026 wage base of $176,100.
• Medicare: 1.45% on all wages, plus an additional 0.9% on wages over $200,000 (single) or $250,000 (joint).

FICA is calculated on a different base than income tax. It applies to gross wages minus HSA, FSA, and pre-tax health premiums, but not minus your 401(k) contribution. So:

• FICA wages = $100,000 − $2,000 (HSA) − $2,400 (health) = $95,600
• Social Security: 6.2% × $95,600 = $5,927
• Medicare: 1.45% × $95,600 = $1,386
• FICA total: $7,313

State income tax

State tax varies widely. Some no-tax states (Texas, Florida, Washington, Tennessee, Nevada, South Dakota, Wyoming, Alaska, New Hampshire on interest-only). Others have flat rates (Colorado ~4.4%, Illinois 4.95%, Utah 4.65%). Many use brackets similar to federal but at lower rates.

For our example, let's split into two scenarios:

• In Texas (no state tax): State tax = $0
• In California (progressive, top bracket 13.3%): For $71,000 of taxable income, an effective rate of roughly 4-5% on taxable income → ~$3,000-3,500

Putting it together: the $100k single example

In Texas

• Gross: $100,000
• 401(k): −$10,000 (goes to retirement account, not your bank but still yours)
• HSA: −$2,000
• Health premium: −$2,400
• Federal income tax: −$10,535
• FICA: −$7,313
• State: −$0

Net to bank account: ~$67,752 / year, or about $5,646/month.

Take-home as % of gross: 67.8%. But that's only the cash; the 401(k) and HSA money is also yours, just tied up. Including them, your total "you" money is $79,752, or 79.8% of gross.

In California

Same as above plus ~$3,200 state tax: $64,552 / year, or $5,379/month.

Take-home cash %: 64.6%.

The "30% rule" — when it works and when it doesn't

A widely-quoted rule of thumb is "expect to lose 30% to taxes." For our $100k Texas example, total taxes (federal + FICA + state) are $17,848 — only 17.8% of gross. The 30% rule is way off here.

Why the discrepancy? The 30% number includes income tax + FICA + state for a higher-income, higher-tax-state scenario, often without accounting for pre-tax deductions. It's a fine guess for a $150k+ earner in California, but wildly wrong for a $60k earner in Texas.

A better mental model for back-of-napkin work:

If you want a more accurate number, Take-Home Pay Calculator does the math for your state and filing status.

Common shortcuts and the errors they introduce

Shortcut 1: "Multiply gross by 0.7"

Fine for high earners in high-tax states. Off by 5-15 points for everyone else. Not bad for a 30-second sanity check; bad for a budget.

Shortcut 2: "Just subtract the federal bracket"

Multiplying gross by your top bracket rate over-states tax dramatically because brackets are marginal. A 22%-bracket earner has an effective federal rate closer to 12-14%.

Shortcut 3: "Forget FICA"

FICA is 7.65% — bigger than most state taxes. Ignoring it is a major error.

Shortcut 4: "Use a paycheck calculator from one of your coworkers' states"

State variation is the single biggest swing in take-home pay between US workers. The same $100k salary takes home ~$3,500 less in California than Texas, every year. Always recalculate by state.

What changes the answer most

If you're trying to predict take-home for a raise, a move, or a new job, the variables that move the number meaningfully:

1. State income tax: Moving from California to Texas or Florida is often the largest single tax change you'll ever experience without changing your salary.
2. Filing status: Joint filers benefit from larger brackets and a $29,200 standard deduction. The marriage penalty exists at high incomes but doesn't kick in until well into six figures.
3. Pre-tax retirement contributions: Every dollar of traditional 401(k) is a dollar that defers tax. Maxing out shifts your tax owed meaningfully.
4. HSA contributions: HSA dollars are tax-deductible for federal, state, AND FICA. They're the most tax-advantaged dollar in the US tax code.

For comparing raises specifically — where the marginal math matters more than total take-home — Raise / Promotion Calculator handles the bracket-jump scenarios.

When to stop estimating and ask a CPA

For most W-2 employees with a straightforward situation, the five-step process above is good to within a few percent. You probably don't need professional help for the estimate; you might want it for the actual return if you have:

• RSU or stock option income
• Side business or freelance income (1099)
• Rental property
• Major life event (marriage, divorce, new baby, big move) mid-year
• Multiple state residencies in the same year

For everyone else: the math is just arithmetic. The hard part is getting the order right. Now you have the order.