How take-home pay works in the US
Your take-home pay is what lands in your bank account after the government takes its cut. In the United States, three layers of tax eat into your gross salary: federal income tax, state income tax, and FICA (Social Security and Medicare). Understanding how each works helps you make smarter decisions about where to live, how much to save, and what salary to negotiate.
Federal income tax uses a progressive bracket system. You don't pay your marginal rate on all your income. Instead, each chunk of income is taxed at its own rate. Someone earning $100,000 as a single filer pays 10% on their first $11,925, 12% on the next $36,550, and 22% on the remainder. The result is an effective federal rate far lower than the marginal 22% bracket.
2026 federal tax brackets (estimated)
These brackets are inflation-adjusted estimates based on 2025 IRS brackets. Official 2026 figures are typically released in late 2025.
| Rate | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 - $11,925 | $0 - $23,850 | $0 - $17,000 |
| 12% | $11,926 - $48,475 | $23,851 - $96,950 | $17,001 - $64,850 |
| 22% | $48,476 - $103,350 | $96,951 - $206,700 | $64,851 - $103,350 |
| 24% | $103,351 - $197,300 | $206,701 - $394,600 | $103,351 - $197,300 |
| 32% | $197,301 - $250,525 | $394,601 - $501,050 | $197,301 - $250,500 |
| 35% | $250,526 - $626,350 | $501,051 - $751,600 | $250,501 - $626,350 |
| 37% | Over $626,350 | Over $751,600 | Over $626,350 |
FICA taxes explained
FICA stands for the Federal Insurance Contributions Act. It funds Social Security and Medicare. Every W-2 employee pays 7.65% of their gross wages in FICA: 6.2% for Social Security (on wages up to $176,100 in 2026) and 1.45% for Medicare (on all wages). If you earn above $200,000 ($250,000 married filing jointly), you pay an additional 0.9% Medicare surtax on the excess. FICA is calculated on your gross salary before 401(k) deductions but after certain other adjustments.
States with no income tax
Nine states charge zero state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Living in one of these states can mean thousands more in annual take-home pay. For a $150,000 salary, moving from California (top marginal rate 13.3%) to Texas saves roughly $9,000 per year in state taxes alone.
If you're searching for a new role, keep in mind that some companies adjust compensation by location. A $200,000 offer in San Francisco might become $170,000 for the same role in Austin. Always calculate the full picture, including state tax, cost of living, and total comp, before comparing offers. Check out our analysis of the highest-paying AI companies in 2026 for context on comp benchmarks.
How pre-tax deductions save you money
Pre-tax deductions like traditional 401(k) contributions and HSA contributions reduce your taxable income. If you earn $120,000 and contribute the 2026 maximum of $23,500 to your 401(k), you only pay federal and state income tax on $96,500. At a 22% marginal federal rate, that saves you $5,170 in federal taxes alone. HSA contributions (up to $4,300 for individuals or $8,550 for families in 2026) offer even better tax treatment: they reduce federal tax, state tax in most states, and FICA taxes.