How Federal Tax Withholding Works

When you receive a paycheck, your employer withholds taxes before paying you. This includes:

  • Federal income tax — Based on your income, filing status, and deductions (10% to 37%)
  • Social Security tax — 6.2% on income up to $168,600
  • Medicare tax — 1.45% on all income, plus 0.9% on income over $200,000

This calculator does not include state income tax, which varies by state.

Understanding Tax Brackets

The US uses a progressive tax system, meaning different portions of your income are taxed at different rates. Your "marginal rate" is the rate on your last dollar of income, while your "effective rate" is the average rate across all your income.

For example, a single filer earning $75,000 doesn't pay 22% on all $75,000 — they pay 10% on the first $11,600, 12% on the next $35,550, and 22% on the remainder.

Standard Deduction vs. Itemized

  • Single — $14,600 standard deduction
  • Married Filing Jointly — $29,200 standard deduction
  • Head of Household — $21,900 standard deduction

Most taxpayers take the standard deduction. You should only itemize if your deductions (mortgage interest, charitable donations, state taxes, etc.) exceed the standard deduction.

Child Tax Credit

Each qualifying child under 17 provides a $2,000 tax credit, which directly reduces your tax bill dollar-for-dollar. This calculator automatically applies the credit.

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