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FILING STATUS | STANDARD DEDUCTION |
|---|---|
Single | $14,600 |
Married filing jointly | $29,200 |
Married filing separately | $14,600 |
Head of household | $21,900 |
Surviving spouse | $29,200 |
IF YOU ARE A SINGLE FILER AND YOUR TAXABLE INCOME IS... | YOUR FEDERAL INCOME TAX WILL BE... | IF YOU ARE A MARRIED JOINT FILER AND YOUR INCOME IS... | YOUR FEDERAL INCOME TAX WILL BE |
|---|---|---|---|
$0 to $11,600 | 10% of your taxable income | $0 to $23,200 | 10% of your taxable income |
$11,600 to $47,150 | $1,160 + 12% of the income over $11,600 | $23,200 to $94,300 | $2,320 + 12% of the amount over $23,200 |
$47,150 to $100,525 | $5,426 + 22% of the income over $47,150 | $94,300 to $201,050 | $10,852 + 22% of the amount over $94,300 |
$100,525 to $191,950 | $17,168.5 + 24% of the income over $100,525 | $201,050 to $383,900 | $34,337 + 24% of the amount over $201,050 |
$191,950 to $243,725 | $39,110 + 32% of the income over $191,949 | $383,900 to $487,450 | $78,221 + 33% of the amount over $383,900 |
243,725 to $609,350 | $55,678 + 35% of the income over $243,725 | $487,450 to $731,200 | $111,357 + 35% of the amount over $487,450 |
$609,350 or more | $183,647.25 + 37% of the income over $609,350 | $731,200 or more | $196,669.5 + 37% of the amount over $731,200 |
SALARY | $60,000 |
|---|---|
Pre-tax retirement savings (5% of salary) | -$3,000 |
Standard deduction | -$14,600 |
Taxable income | $42,400 |
FEDERAL INCOME TAX | $4,856 |
|---|---|
Social Security tax | $3,720 |
Medicare tax | $870 |
Total taxes | $9,446 |
RETIREMENT SAVINGS | $250 |
|---|---|
Health, dental, and vision insurance | $140 |
Life insurance | $15 |
Total payroll deductions | $405 |
MONTHLY SALARY | $5,000 |
|---|---|
Taxes | -$787.17 |
Payroll deductions | -$405 |
Take home pay (monthly) | $3,807.83 |
If you get a new job, knowing your salary is nice, but it doesn't necessarily reflect how much money you're actually going to bring home. If you know your salary, exemptions, filing status, and other withholdings, you can figure out how much you'll bring home per month.
Income taxes are much easier to figure out on an annual basis, so let's start there. The amount of federal income taxes withheld from your paycheck is based on two factors:
First, take your salary and subtract your standard deduction amount, as indicated in the table below. Also remember to subtract any pre-tax contributions you'll be making to retirement accounts, health insurance plans, health savings accounts (HSAs), or flexible spending accounts (FSA).
This number is an estimate of your taxable income. From here, you can use the following tax table to figure out approximately how much federal income tax will be withheld from your paycheck.
Take the amount of your tax and divide by 12 to determine how much will be withheld per month. Also calculate your state taxes, and any local taxes you may owe. Each state has a different tax rate (or none at all). Here's a link from TaxFoundation.org (for 2024) to help you find your state tax rate.
We're not done with taxes quite yet. Social Security taxes will take 6.2% of up to $168,600 of your salary. Medicare taxes will take another 1.45%, and are applied to your entire salary, no matter how much.
From here, you'll need to tally up the rest of your deductions, including (but not limited to):
Remember to figure all of these amounts on a monthly basis. Many health insurance premiums are quoted on a monthly basis, but it's worth double-checking the amounts, and converting them to monthly figures if needed. For example, if you're a teacher and pay union dues of $20 from each semi-monthly paycheck, be sure to use $40 when adding up your deductions.
The final step is to take your salary, divide it by 12, and then subtract all of your taxes and payroll deductions. The result of this calculation will be your monthly take-home pay.
If this calculation seems rather complicated, the IRS has an online payroll calculator that can do the math for you so you'll know where the number on your paycheck is coming from.
To illustrate this, let's consider an example. Let's say that you just got a new job with a starting salary of $60,000. For this calculation, we'll assume you are single, and claim just one exemption. You have agreed to contribute 5% of your salary to your new employer's 401(k) on a pre-tax basis. So your taxable income is:
According to the tax table mentioned earlier, your Federal income tax is expected to be $4,856 for the year. For simplicity's sake, let's say that you live in a state with no state income tax, so your taxes can be calculated with:
Dividing by 12 gives us a monthly tax estimate of $787.17.
You have the following payroll deductions each month:
Finally, taking your taxes and other items into account gives us your monthly take-home pay:
This article is part of The Motley Fool's Knowledge Center, which was created based on the collected wisdom of a fantastic community of investors. We'd love to hear your questions, thoughts, and opinions on the Knowledge Center in general or this page in particular. Your input will help us help the world invest, better! Email us at [email protected]. Thanks -- and Fool on!
