This guide explains how US income tax works, including federal tax brackets, the standard deduction, Social Security, Medicare, and the role of state income tax. If you want to understand why two people on the same salary can take home very different amounts, this page is the place to start.
The United States does not use a single flat nationwide income tax. Instead, take-home pay is shaped by a mix of federal tax, payroll tax, state tax, filing status, and pretax deductions such as a 401(k).
Your starting point is your gross pay: salary, wages, overtime, bonus, and in some cases other taxable compensation.
Federal taxable income is generally lower than gross income because deductions such as the standard deduction and some pretax retirement contributions reduce the amount being taxed.
Your final net pay can be reduced by federal tax, Social Security, Medicare, state income tax, local tax, 401(k) contributions, healthcare deductions, and other payroll items.
One of the biggest misunderstandings around US tax is the idea that your whole salary is taxed at your top bracket. That is not how it works. The federal system is progressive, which means each slice of taxable income is taxed at the rate for that slice rather than one flat rate on the entire amount.
That is why a person on $70,000 does not suddenly lose 22% or 24% of their entire pay just because they move into a higher bracket. Only the portion of taxable income inside that bracket is taxed at that higher rate.
These are the main federal marginal rates that matter for most salary earners. Your actual tax bill depends on taxable income after deductions, not just your headline salary.
| Rate | Single | Married filing jointly |
|---|---|---|
| 10% | $0 to $12,400 | $0 to $24,800 |
| 12% | $12,401 to $50,400 | $24,801 to $100,800 |
| 22% | $50,401 to $105,700 | $100,801 to $211,400 |
| 24% | $105,701 to $201,775 | $211,401 to $403,550 |
| 32% | $201,776 to $256,225 | $403,551 to $512,450 |
| 35% | $256,226 to $640,600 | $512,451 to $768,700 |
| 37% | Over $640,600 | Over $768,700 |
The standard deduction is one of the biggest reasons take-home pay is better than many people first assume. It reduces how much of your income is exposed to federal income tax before the bracket system is applied.
Many employees use the standard deduction rather than itemizing, especially when doing quick salary and take-home comparisons.
If a single filer earns $70,000, the full $70,000 is not exposed to federal income tax in the same way. The standard deduction reduces taxable income before the bracket calculation is made.
This is one of the reasons a salary page or calculator should always show a breakdown rather than just applying one flat percentage to gross pay.
Social Security tax is charged at 6.2% on employee wages up to the yearly wage base. For 2026, that wage base is $184,500.
Once wages go above the Social Security cap, that part of FICA no longer rises through Social Security, although Medicare still continues.
Medicare tax is charged at 1.45% on employee wages and does not have the same regular wage cap as Social Security.
High earners can also face extra Medicare withholding in some cases, which is another reason exact net pay can differ from simplified examples.
| Payroll tax | Employee rate | 2026 note |
|---|---|---|
| Social Security | 6.2% | Applies up to $184,500 of covered wages |
| Medicare | 1.45% | No regular wage cap on basic Medicare tax |
Federal tax is only part of the picture. In the US, state income tax can create a major take-home difference between people on the same salary. A worker on $70,000 in Texas can have a different net outcome from someone on $70,000 in California or New York even before local taxes and deductions are considered.
Progressive state tax structure. Take-home pay is often lower than no-tax states on the same gross salary.
No state income tax, which can make headline salary go further, all else being equal.
New York can be heavier than many states, while Illinois is commonly treated as a flatter state-tax comparison point.
Pretax retirement contributions can reduce taxable income for federal purposes, while also reducing the cash you take home each payday.
Extra pay can move more of your income into higher marginal brackets, and withholding on bonuses can look different from regular salary withholding.
Insurance, HSA or FSA contributions, commuter benefits, and other payroll deductions can materially change real take-home pay.
Single, married filing jointly, and head of household all change the tax calculation and can shift the effective tax rate noticeably.
City or local taxes can further reduce pay in some locations, which means state-only comparisons do not always tell the whole story.
Credits and special deductions can pull actual tax below what a broad salary example suggests, which is why guides and calculators should be treated as estimates.
These examples are the natural next step for users who move from a general tax guide to a specific salary search.
A common entry point for users comparing federal tax, FICA, and whether a mid-range salary stretches differently across states.
A strong mid-band comparison point where state differences become easier to spot and monthly take-home pages tend to perform well.
This is a strong salary band for exploring how California, Illinois, and no-tax states change the net result.
Six-figure salary searches often have strong informational intent and are ideal for linking to both main pages and monthly breakdown pages.
These internal links help turn a broad tax guide into a state-specific answer.