How much of your paycheck will you be allowed to keep for yourself in 2018 after a greedy Uncle Sam has extracted what he wants out of it to put into his own till?
Thanks to the passage of the Tax Cuts and Jobs Act of 2017, which was signed into law just before the Christmas holiday, the answer for many Americans is going to be more than they would have without the tax cuts. However, the answer to the question of "how much more?" will depend upon a lot of factors that can vary from one individual paycheck earner to the next.
One of Political Calculations' missions is to build tools to help people easily answer personal finance questions like these, where to be able to answer the full question of "how much more of the money I earn will I see on my paychecks after the tax cuts take effect?" first requires us to work out how much in withholding taxes that the U.S. government will be taking out of each of your paychecks in 2018 before the nation's federal withholding taxes are adjusted to account for the new tax cuts. Those new federal withholding tax rates won't take effect until sometime in February 2017, where we won't find out how much they'll be until they're published sometime later this month.
When they are, we'll present a second tool to do that new paycheck math! And as an extra bonus, we're planning to do a third tool where we'll directly estimate how much your take home pay will change as a result of the new tax cuts, which will firmly answer the question of "how much more?" your paychecks may be as a result of the new tax cuts.
But wait, that's not all! A number of major U.S. employers have already announced that they'll be giving many of their employees raises as direct result of the tax cuts being passed into law. If your employer is one of these firms or will be joining these firms in boosting your earned income, our tool can take your raise into account too!
We can also answer other paycheck-related math questions that might be important to you, such as:
- What if I boost my pre-tax 401(k) or 403(b) retirement plan contributions - how will that change my take home pay?
- Will I take a hit from the Additional Medicare Tax? [That's the "shared responsibility contribution" that doesn't ever go into Medicare's trust funds, which can affect higher income earners.]
- How would a flexible savings account for health care or dependent care expenses affect my take home pay?
Our tool below is designed to answer those questions, as well as a number of others that may occur to you that we haven't considered! Just enter the indicated information as it applies for you, and we'll do our best to estimate how much of the money you work hard to earn will still be in your possession after the federal government has withheld what it wants from your paycheck! [If you're reading this article on a site that republishes our RSS news feed, please click through to our site to access a working version.]
|What if You Had a Raise?||Desired Raise (%)|
|Your Paycheck and Tax Withholding Data|
|Basic Pay Data||Current Annual Pay|
|Federal Withholding Data||Filing Status|
|Number of Withholding Allowances|
|401(k) or 403(b) Contributions||Pre-Tax Contributions (%)|
|After Tax Contributions (%)|
|Flexible Spending Account Annual Contribution Data||Health Care Spending Account|
|Dependent Care Spending Account|
|Your Paycheck's Bottom Line|
|Your "Typical" Paycheck Data|
|Basic Income Data||Proposed Annual Salary (Including Raise!)|
|Typical Paycheck Amount|
|Federal Tax Withholding Amounts||U.S. Federal Income Taxes|
|U.S. Social Security Taxes|
|U.S. Medicare Taxes|
|U.S. Additional "Medicare" Taxes (If Applicable)|
|401(k) or 403(b) Contributions||Pre-Tax Contributions|
|Flexible Spending Account Contributions||Health Care Spending Account|
|Dependent Care Spending Account|
|Take Home Pay Estimate||Basic Net Paycheck Amount|
|... But, After Social Security's Taxable Income Cap Is Reached, It Becomes (If Applicable, for a Full Paycheck)|
|... And Then, After Additional Medicare Tax Income Threshold Is Reached, It Becomes (If Applicable, for a Full Paycheck)|
Now that we've given you a sense of how much money you'll have withheld in 2018 from each of your paychecks by the U.S. federal government, at least until the new tax cuts take hold, we should note that there are some really complicating factors that may come into play during the year depending upon how much you earn.
For example, in 2018, once you have earned over $128,400, you will no longer have the Social Security payroll tax of 6.2% of your income deducted from your paycheck (or 12.4% if you are self-employed, but our tool above is designed for those employed by others). But then, by the time that happens, you'll have long been paying taxes on your income that are taxed at rates that are at least 10% higher than those paid by over half of all Americans.
There's also the complication provided by the so-called "Additional Medicare Tax" that your employer is required to begin withholding from your paycheck if, and as soon as, your year-to-date income rises above the $200,000 mark, which is part of the new income taxes imposed by the "Affordable Care Act" (a.k.a. "Obamacare"). Since the money collected through this 0.9% surtax on your income does not go to directly support the Medicare program, unlike the real Medicare payroll taxes paid by you and your employer, it is really best thought of as an additional income tax.
In the tool above, in case the amount of your annual 401(k) or 403(b) retirement savings contributions exceed the annual limits set by law, we've limited the results our tool provides to be those consistent with their statutory limits, and will do so as if you specifically set the percentage contributions for these contributions with that in mind. Also, our tool does not consider whether you might take advantage of the "catch-up" provisions in the law that are available to individuals Age 50 or older.
Elsewhere on the Web
There are other salary and hourly paycheck calculators like this on the Internet, including the very well done tools available at PaycheckCity.com. We really like PaycheckCity's calculators because they allow you to determine the amount of state income tax withholding that will be taken out of your paycheck separately from what the federal government takes. Meanwhile, payroll processor ADP also has a salary paycheck calculator, but we find the interface for PaycheckCity's calculators are more user-friendly.
Then again, if you live in one of the seven states that have no personal income tax for wage and salary income (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming), our tool above will provide you with a very good estimate of your actual take-home pay.