Why is my take-home pay so much less than my salary?

Federal income tax withholding, FICA (7.65% combined), state income tax (0-13%), potentially local tax, health insurance premiums, 401(k) contributions, HSA or FSA elections, and occasional garnishments add up. A $100,000 salary in a state like California often lands near $66,000-70,000 take-home after all deductions and contributions.

What is the Medicare additional tax?

A 0.9% surtax on Medicare wages that exceed $200,000 for single filers, $250,000 for married filing jointly. Unlike regular Medicare tax, the employer does not match the additional 0.9%. Employers are required to begin withholding once cumulative wages exceed $200,000 regardless of filing status.

Should I max out my 401(k) or my HSA first?

If your employer offers a 401(k) match, capture the full match first, that is instant 100% return. After the match, an HSA often wins mathematically because it is triple-tax-advantaged: deductible going in, tax-free growth, and tax-free withdrawal for qualified medical expenses. After the HSA limit, continue 401(k) contributions up to the $23,500 2026 employee limit.

What is the difference between gross and net pay?

Gross pay is your total earnings before any deductions. Net pay is what lands in your bank account after federal income tax, FICA, state income tax, health insurance, retirement contributions, and any other deductions. For most salaried workers, net pay runs 60-75% of gross depending on state and benefit elections.

Reading Your Paycheck: What Every Deduction Actually Means in 2026, CalcIntel

A typical U.S. paystub contains anywhere from eight to twenty line items between gross pay and the deposit that lands in your bank. Most of them are not optional, not explained, and not the same across states or pay periods. Here is a line-by-line walkthrough using 2026 rates and thresholds, built around the question every salaried worker eventually asks: why is the number on the offer letter so different from the number in the account?

Gross pay: the starting line

Gross pay is your earnings for the period before any deductions. For a $100,000 salary paid bi-weekly, gross is $3,846.15 per paycheck (100,000 ÷ 26). Overtime, bonuses, and commissions all appear as separate gross line items and are taxed at supplemental withholding rates, 22% federal flat rate up to $1M in supplemental wages, 37% above.

Pre-tax deductions (the ones that shrink the tax base)

Several deductions come out of gross before federal income tax is calculated, reducing your taxable income:

401(k) or 403(b) traditional contributions: up to $23,500 in 2026 (plus a $7,500 catch-up at age 50+). A $200/paycheck contribution reduces federal and state taxable wages.
HSA contributions: up to $4,300 single / $8,550 family in 2026. Triple-tax-advantaged: no federal income tax, no FICA, no state tax in most states.
FSA contributions: up to $3,300 in 2026 for medical FSA. Same triple-advantage as HSA, but use-it-or-lose-it by year end.
Pre-tax health, dental, vision premiums: reduce all three tax bases when paid through a Section 125 cafeteria plan.

Federal income tax withholding

Calculated using the IRS Publication 15-T withholding tables, driven by the W-4 you filed. 2026 brackets for a single filer run 10%, 12%, 22%, 24%, 32%, 35%, 37% across income levels from $11,925 to $626,350+. Remember that the bracket is marginal, hitting the 22% bracket at $48,475 does not retax your entire income at 22%. Your effective federal rate is always lower than your marginal bracket.

FICA: Social Security + Medicare

FICA is two separate taxes bundled on the paystub:

Social Security: 6.2% of wages up to the annual wage base ($176,100 in 2026). Once you exceed it, the 6.2% stops for the rest of the calendar year.
Medicare: 1.45% on all wages, no cap.
Medicare additional: 0.9% on wages above $200,000 single / $250,000 married filing jointly. Employer begins withholding once your cumulative wages cross $200,000 regardless of filing status.

Your employer matches the 6.2% and 1.45%, but not the 0.9% additional. Self-employed workers pay both sides as self-employment tax.

State and local income tax

Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire (on wages), South Dakota, Tennessee, Texas, Washington, and Wyoming. Others range from a flat 3% in Michigan and Pennsylvania to 13.3% top marginal in California. Some cities impose local income taxes on top: New York City (up to 3.876%), Philadelphia (3.75% residents), and several Ohio municipalities. The Tax Policy Center publishes current state-by-state rates.

Post-tax deductions

After all taxes are withheld, additional items may come out of net pay:

Roth 401(k) or Roth IRA contributions via payroll: no immediate tax reduction, but qualified withdrawals in retirement are tax-free. See our Roth vs. traditional IRA glossary entry.
Garnishments: for child support, federal student loan default, or court judgments. Protected by federal and state limits, typically no more than 25% of disposable income.
Union dues, life insurance premiums, charitable contributions: post-tax in most cases.

Worked example: $120,000 single filer in California, 2026

Using bi-weekly pay ($4,615.38 gross) with a 6% 401(k) contribution and single health coverage at $150/paycheck pre-tax:

Gross: $4,615.38
401(k) pre-tax (6%): −$276.92
Health premium pre-tax: −$150.00
Federal taxable: $4,188.46
Federal income tax withholding (approx): −$628
Social Security (6.2%): −$286.15
Medicare (1.45%): −$66.95
California income tax (approx): −$250
California SDI (1.1%, no 2026 cap): −$50.77
Estimated net: $2,906.61 per paycheck ≈ $75,572/year

That is a take-home rate of 62.9% of gross before 401(k) contribution, or 65.3% if you count the 401(k) as deferred compensation rather than a deduction.

Run your own paystub through the take-home pay calculator to get these line items calculated for your state. For the federal portion alone, the federal income tax calculator handles the bracket math. If you are self-employed, use the self-employment tax calculator to see the equivalent FICA load. And for retirement planning built on your net pay, the 401(k) calculator and Roth IRA calculator project how each line item compounds into a retirement balance. The compound interest post explains the math behind those projections.