The Math Behind Your Paycheck: How Withholding Is Actually Calculated

Two coworkers with the same $75,000 salary can take home different amounts every two weeks, and neither one filled out anything wrong. Withholding is an estimate, not a tax bill, and the estimate depends on a short list of inputs that are easy to overlook. Here is the arithmetic behind the number on your pay stub, step by step.

Gross Pay to Taxable Pay

Withholding starts from gross wages for the period, then subtracts pre-tax deductions. For a $75,000 salary paid biweekly, gross per period is $2,884.62 (75,000 ÷ 26). Suppose the employee contributes 5% to a traditional 401(k) and pays $60 per period in pre-tax health premiums:

• 401(k): $144.23
• Health premium: $60.00
• Taxable wages: 2,884.62 − 144.23 − 60.00 = $2,680.39

Only the $2,680.39 figure feeds the withholding tables. The 401(k) and premium removed $204.23 from taxable income before tax is even considered.

Annualizing the Period

Withholding tables work on annual figures, so the system multiplies the per-period taxable wage by the number of pay periods. Here that is 2,680.39 × 26 = $69,690.14 annualized taxable wages. This is where the first surprise lives: a bonus paid in one period inflates the annualized figure for that single paycheck, which is why bonus checks are withheld at a much higher effective rate than regular ones.

Your Filing Status and Standard Deduction

The annualized number is then reduced by the standard deduction for the filing status claimed on your W-4. For a single filer the 2026 standard deduction is $15,000, so taxable income for the tables becomes 69,690 − 15,000 = $54,690. Change the W-4 to married filing jointly and the deduction roughly doubles, cutting the taxable base and the withholding with it — without any change in salary.

The Brackets, Applied Marginally

Tax brackets are marginal, not flat. Only the income inside each range is taxed at that range’s rate. Applying a simplified single-filer schedule to the $54,690 figure:

Divide by 26 pay periods and roughly $272.49 comes out of each check for federal income tax. Notice the effective rate is 10.4% of taxable wages, even though the top dollar is taxed at 22% — the classic confusion behind “I got a raise into a higher bracket and lost money,” which cannot happen under marginal rates.

Adding the Flat Taxes

Above federal income tax, two more taxes are withheld as flat percentages of gross (up to wage caps): Social Security at 6.2% and Medicare at 1.45%. On $2,884.62 gross that is $178.85 and $41.83 respectively. State income tax, if any, is layered on top, and nine states charge none at all.

Why the Estimate Misses

Withholding is calculated as if every period looked like the current one. It does not know about a mid-year raise, a second job, a year-end bonus, or investment income. That gap is why many people either get a refund in April or owe a balance. To estimate a full-year figure before it happens, a tax and percentage calculator lets you plug in income, deductions, and filing status and see the projected total, then compare it against the withholding already taken.

FAQ

Why is my bonus withheld at 22%? Supplemental wages use a flat 22% federal rate, separate from the regular bracket method.

Can I change withholding without a new job? Yes — file a new W-4 any time to add dependents or request extra withholding.

Does a bigger refund mean I did well? No. A large refund is an interest-free loan to the government; a smaller, balanced refund is usually the better outcome.

The Bottom Line

Your take-home pay is the result of four steps: subtract pre-tax deductions, annualize, reduce by the standard deduction, then apply marginal brackets. Know those four steps and you can predict your next check to within a dollar — and understand exactly why the person at the next desk takes home something different.