Why your gross salary tells you almost nothing
A $120,000 gross salary in Texas and a $120,000 gross salary in California are not the same paycheck. After federal withholding, FICA, state tax, 401(k), and health premiums, the Texas employee takes home around $84,500 annually. The California employee takes home around $76,200. That's an $8,300 gap every year for the same headline number — $2,075 per quarter — and it's entirely a function of state tax and cost structure.
Most paycheck conversations start with gross and stop there. The candidate says "I got a $10,000 raise" when the actual increase in take-home is $5,900-7,000 after withholding. A "10% raise" nets 6%. Knowing this before you negotiate, move, or accept an offer is the difference between feeling rich and feeling bewildered.
The four deductions that eat your paycheck
1. Federal income tax. Progressive, with brackets from 10% to 37% in 2026. Your "effective rate" (the one this calculator uses) is usually much lower than your top marginal rate — someone at a $120k income has a top marginal rate of 22-24% but an effective rate of around 15-17% after the standard deduction.
2. FICA (Social Security + Medicare). Flat 7.65% on the first $168,600 (2026 wage base) for Social Security, plus 1.45% for Medicare with no cap. Self-employed pay the full 15.3% (the calculator models the W-2 version at 7.65%).
3. State income tax. Zero in TX, FL, WA, NV, TN, SD, WY, AK, NH (wages). Moderate (3-6% effective) in most. 9-11%+ in CA, HI, NY, NJ, OR, MN. The state tax delta can single-handedly exceed the benefits value of a job.
4. Pre-tax deductions. 401(k), health premiums, FSA/HSA, commuter benefits. These reduce taxable income, so a $10,000 pre-tax 401(k) contribution saves about $2,400-2,800 in combined federal and state tax for a typical middle-bracket earner.
Real example: the 'same salary' move that was a pay cut
A software engineer transferred internally from Austin ($0 state tax) to San Francisco (13.3% top bracket) at the same $185,000 salary. Headline salary unchanged. But the state tax alone moved from $0 to ~$17,500 (after standard deduction). Rent went from $2,250/mo to $3,700/mo ($17,400/yr delta). Cost of living for groceries, transit, and services ticked up 40-60%.
Net: moving at the same salary meant giving up roughly $35,000 of purchasing power annually. The engineer negotiated a geo adjustment up to $225,000 before the move. Even that barely broke even after tax and rent — but it was defensible because she ran the calculator first.
Before any salary move, run both cities through this calculator and the Cost of Living Salary Adjustment tool.
What this calculator gets right — and what it doesn't
The formulas use simplified combined effective rates so you can swap in your number quickly. This means: the federal rate field should be your effective rate from last year's return (total federal tax / gross income), not your marginal bracket. Pulling the real number off your W-2 or 1040 takes 60 seconds and makes the calculator much more accurate.
The calculator models a 401(k) contribution as pre-tax (traditional). For Roth contributions, zero out that field and treat the amount as post-tax — Roth saves you nothing on current income tax but grows tax-free.
Not modeled: AMT (rare but relevant for high earners with incentive stock options), additional Medicare tax (0.9% on wages above $200,000 single / $250,000 married), local/city income tax (NYC, SF, Philly), and state-specific credits. For a binding number, run a draft return in TurboTax or FreeTaxUSA or hand the numbers to a CPA.
How to use the output in a real decision
The most common use case is comparing offers. Run each offer through the calculator with the correct state tax rate. Compare annual take-home, not gross. Two offers at $130k vs $140k in different states often reverse once you look at net — the $130k in TX nets $94k, the $140k in CA nets $92k.
Second use case: understanding what a raise actually lands in your bank account. A $10,000 pre-tax raise at a 22% federal + 5% state combined marginal rate nets about $7,300 — not $10,000. When budgeting the raise, plan around $600/mo in extra take-home, not $833/mo.
Third use case: optimizing pre-tax contributions. Every dollar into traditional 401(k) or HSA reduces taxable income. The calculator shows you the impact immediately when you change the 401(k) input.
Paycheck frequency quirks
The calculator shows monthly take-home. If your employer pays bi-weekly (every two weeks, 26 paychecks/year), two months per year have three paychecks instead of two — use those months for savings or one-time expenses. If paid semi-monthly (twice per month, 24 paychecks/year), every month has two paychecks of equal size.
The annual take-home is the same either way, but cash-flow planning differs. Use the Paycheck Frequency Comparison to see per-paycheck amounts under each schedule.
Disclaimer
This is not tax or financial advice. Take-home pay depends on your specific filing status, number of dependents, state of residence, employer-specific benefits, and deductions claimed. The calculator uses simplified effective rates — not marginal rates — and does not model AMT, additional Medicare tax, local income tax, or specific state credits. For a binding estimate, use a draft tax return or consult a CPA. Tax law changes every year; re-verify against the current year's rules before making any decision based on these numbers.