Question 1

How is federal income tax calculated?

Accepted Answer

Federal income tax uses a progressive bracket system. Your income is divided into portions that are each taxed at increasing rates. For example, in 2025 a single filer pays 10% on income up to $11,925, 12% on the next portion up to $48,475, and so on. Only the income within each bracket is taxed at that bracket's rate, not your entire income.

Question 2

What is FICA and how much does it cost?

Accepted Answer

FICA stands for the Federal Insurance Contributions Act. It funds Social Security (6.2% of your gross pay up to $176,100 in 2025) and Medicare (1.45% of all earnings, plus an additional 0.9% on earnings above $200,000). Together these typically total 7.65% of your paycheck for most workers.

Question 3

How do pre-tax deductions like a 401(k) reduce my taxes?

Accepted Answer

Pre-tax deductions such as 401(k) contributions, HSA contributions, and FSA contributions are subtracted from your gross income before federal and state income taxes are calculated. This lowers your taxable income, meaning you pay less in income tax. However, pre-tax deductions do not reduce FICA taxes (Social Security and Medicare).

Take-Home Pay

Your Info

Annual Take-Home

Monthly Take-Home

Biweekly Paycheck

Effective Tax Rate

Where Your Money Goes

Federal Tax Brackets