Methodology and Sources
Every number on this site is computed, not estimated. This page documents the order of operations, the parameters for 2026, and where each one comes from — so you can check our work.
Last reviewed 2026-08-29 · Tax years 2024, 2025 and 2026
Order of operations
- Start from gross pay. Annual salary, or hourly rate multiplied by hours plus overtime at the applicable multiplier, plus bonuses, commissions and reported tips.
- Subtract pre-tax benefit deductions. Section 125 items — health, dental and vision premiums, FSA and payroll HSA contributions — reduce wages for both income tax and FICA.
- Subtract retirement deferrals. Traditional 401(k), 403(b) and 457 deferrals reduce income tax wages but not Social Security and Medicare wages.
- Apply FICA. 6.2% Social Security up to the annual wage base, 1.45% Medicare with no cap, plus 0.9% Additional Medicare Tax on wages above $200,000.
- Apply federal income tax. Publication 15-T Worksheet 1A: annualize, add Step 4(a) other income, subtract Step 4(b) deductions and the standard-deduction offset, look up the Standard or Step 2 Checkbox schedule, subtract Step 3 credits, add Step 4(c) extra.
- Apply state income tax. Each state's own base, standard deduction, exemptions, credits and rate schedule.
- Apply local income tax. City, county or school district tax on the appropriate base, at resident or non-resident rates.
- Apply state payroll premiums. Employee-share disability, paid family leave, long-term care and unemployment contributions with their own rates and wage caps.
Federal parameters for 2026
| Parameter | 2026 value |
|---|---|
| Standard deduction, single | $16,100 |
| Standard deduction, married filing jointly | $32,200 |
| Standard deduction, head of household | $24,150 |
| Publication 15-T line 1g offset, joint | $12,900 |
| Publication 15-T line 1g offset, all others | $8,600 |
| Social Security rate and wage base | 6.2% up to $184,500 |
| Medicare rate | 1.45%, no wage cap |
| Additional Medicare Tax | 0.9% on wages above $200,000 |
| Supplemental wage withholding rate | 22% up to $1,000,000, then 37% |
| 401(k) elective deferral limit | $24,500 |
| 401(k) catch-up, age 50 and over | $8,000 |
| 401(k) super catch-up, ages 60 to 63 | $11,250 |
| HSA contribution limit, self-only | $4,400 |
| HSA contribution limit, family | $8,750 |
| Health FSA limit | $3,400 |
| W-4 Step 3 credit per qualifying child | $2,200 |
| W-4 Step 3 credit per other dependent | $500 |
| Federal minimum wage | $7.25 |
How the withholding schedules are derived
Publication 15-T publishes two sets of annual percentage-method schedules. Rather than transcribe them, we derive them from the statutory brackets so they reconcile exactly. A Standard schedule threshold equals the statutory bracket plus the standard deduction minus the line 1g offset; a Step 2 Checkbox threshold equals half the bracket plus half the standard deduction. For 2026 that reproduces the published joint schedule breakpoints of $19,300, $44,100, $120,100, $230,700, $422,850, $531,750 and $788,000 exactly, and the single schedule breakpoints of $7,500, $19,900, $57,900, $113,200, $209,275, $263,725 and $648,100.
Primary sources
- IRS Publication 15-T, Federal Income Tax Withholding Methods, 2024, 2025 and 2026 editions
- IRS Publication 15, Employer's Tax Guide
- Revenue Procedure 2023-34, 2024-40 and 2025-32 for inflation-adjusted brackets and deductions
- Form W-4 (2026) and its Deductions Worksheet, for the One Big Beautiful Bill Act entries
- Social Security Administration contribution and benefit base announcements
- Each state's department of revenue withholding guide or formula for 2026
- State labour and paid-leave agencies for 2026 premium rates and wage caps
- US Department of Labor for federal and state minimum wage rates
Known limitations
A withholding calculator is not a tax return. We model the payroll calculation, not your final liability, so tax credits, itemised deductions, capital gains, self-employment income and the reconciliation of Additional Medicare Tax on Form 8959 are outside its scope. Per-paycheck figures are annual totals divided by your pay frequency, which means the Social Security line is smoothed rather than stopping abruptly when you cross the wage base — high earners will see their real paycheck rise part-way through the year.
Local income tax coverage is representative rather than exhaustive. Ohio alone has more than six hundred taxing municipalities and Pennsylvania has thousands of Act 32 rates; we carry the largest and most-searched jurisdictions and label the rest as a typical rate. Where a state changed its rate mid-year — Georgia, Utah and West Virginia all did in 2026 — we use the rate that applies to the full tax year and say so on that state's page.
Corrections
If a figure here disagrees with your pay stub or with a state publication, we want to know. Contact us and include the state, the tax year and the figure you expected.