PaystubLedger
THE METHOD · 2026

How Your Paycheck Is Calculated

A paycheck is a sequence of calculations, not one tax percentage. PaystubLedger annualizes wages, estimates each deduction separately, and divides the resulting net amount into pay periods.

Start with annual gross wages

For salary, use the quoted annual amount. For hourly work, multiply your rate by paid hours per week and paid weeks per year. This assumes a steady schedule; unpaid time off lowers the result.

Apply separate federal rules

The 2026 federal standard deduction reduces income subject to federal income tax. Marginal brackets tax only the slice within each band. Social Security uses a 6.2% employee rate up to its annual wage base. Medicare applies at 1.45% to all wages, with 0.9% additional withholding above $200,000.

Add the state line

State income tax may be absent, flat or progressive. We use each listed state’s sourced 2026 rule and show California SDI separately. Actual payroll can differ because Form W-4, state withholding forms, pretax benefits, credits, multiple jobs and local taxes are outside this baseline.

Use the numbers: Open the paycheck calculator to apply these ideas to a salary or hourly rate. The result is an annualized estimate; your employer’s actual withholding can differ.

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