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Free Salary Paycheck Calculator
Use our salary paycheck calculator to calculate your employees' gross earnings, federal and state income tax withholding, Medicare and Social Security tax, and final take-home pay.
March 08, 2023
5 min read
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Sending employees home with the right amount of money is one of your most important jobs as a business owner. It’s also your job to accurately remit taxes to the federal government, which means withholding the right amount of federal, state, and local income taxes from your employee’s paycheck. Our paycheck calculator below can help you determine the amounts you need to withhold upon receiving information regarding your location, pay method and frequency, along with basic federal and state tax details.
How to calculate your employee’s paycheck
Step 1: Enter your employee’s pay information
Most employers use this paycheck calculator to calculate an employee’s wages for the current payroll period. If this describes your situation, type in your employee’s gross pay and choose “pay per period” under the payment method drop-down menu. If you want to calculate an employee’s annual net paycheck, plus their annual tax withholding amount, choose “annual” from the same drop-down menu.
For example, if your salaried employee makes $52,000 a year and is paid weekly, you have two choices. Either enter $52,000 and select “annually” as your gross pay method, or enter $1,000 and select “pay per period” as the method. If you’re using this calculator to cut an accurate paycheck, you’ll choose the pay-per-period paycheck calculation. (On the other hand, if you want to figure out what gross wage you should pay your employee to ensure they net the right take-home pay, use our gross-up calculator instead of our paycheck calculator.)
Regardless of which method you’re using, you need to know the amount of gross wages your employee has earned so far this year, or their gross pay YTD (year to date). You should already have this information on hand: payroll templates and software always list how much your employees have been paid prior to this pay period. (If you aren’t tracking this information, you need to start ASAP. Get in touch ASAP with an accountant who can help you record gross pay and update your past records.)
After you enter your employee’s gross pay YTD, use the drop-down menu to select your employee’s pay schedule, or how frequently you pay employees. The most common pay schedules are weekly, bi-weekly, semi-monthly, or monthly. Depending on your industry and state, though, you might be required to pay employees on a different schedule. If you’re not sure of your legal payday requirements, the Department of Labor lists each state’s payday requirements. The list is updated yearly.
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Hourly employee paycheck calculator
If you’re trying to calculate hourly wages, not salaried wages, use our hourly paycheck calculator instead.
Step 2: Enter the employee’s tax withholding information
All salaried employees are required to submit IRS Form W-4 when they first start working for you. The form should give you all the information you need to withhold the right tax amount from your employee’s paycheck, including their:
- Filing status (single, married filing separately, married filing jointly, or head of household)
- Number of allowances (based on additional household income and number of dependents)
- Additional tax withholding information
Some employees are eligible for exemptions from federal income tax withholding or the FICA tax (a.k.a. Medicare and Social Security taxes). Most employees don’t qualify, but if yours do, check “yes” on the exemption section.
Step 3: Enter state information
Not all states require an income tax, and tax rates vary from state to state. If your employee works in a state with an income tax, choose the state from the drop-down menu, and the calculator will fill in the tax details for you. If you have employees in multiple states, remember to select the state your employee works in, not the state where your business is primarily located.
Step 4: Enter local tax information (if necessary)
Not every city requires small businesses and individuals to pay local taxes. If yours does, enter your city information after your state information to generate the right amount in local tax withholding.
Step 5: Add other deductions
Depending on your company's employee benefits, employees might elect to withhold money for HSA contributions, 401(k) retirement plans, or charitable donations. Some employers also let their employees make voluntary deductions, such as retirement savings contributions.
Step 6: Record paycheck information
Once you’ve calculated your employee’s net wage, you need to make a clear record of the amount calculated and paid out. Most states require you to give employees pay stub access so they can see exactly how much they earned and how much was withheld.
You should also keep accurate wage records for tax purposes, both in the event of an audit and so you have the right information on hand to remit your quarterly payroll taxes.
We recommend a few different free payroll templates, which both record your employees’ wages and automatically generate pay stubs. If you have too many employees to track by hand (or if you simply want to offload some time-consuming paycheck tasks), payroll software can automatically calculate paychecks and even remit taxes on your behalf.
If you’re not ready to pay for payroll software, free payroll software can help process payroll. (You can even pair your free payroll software with free accounting software to minimize the amount of time you spend crunching numbers and manually entering financial data.)
The takeaway
Accurately calculating employee paychecks isn’t just crucial to keeping your business afloat. It’s also essential to your employees’ livelihoods and happiness, not to mention a key part to staying compliant with the IRS. Our paycheck calculators and payroll templates can help you meet all of these goals, and if you want someone else to wrangle your payroll in and outs so you can focus on running a business, payroll software is an option too.
Are you about to hire your first employee? Our quick and dirty guide to small-business payroll familiarizes you with payroll processes so your first payday goes as smoothly as possible.
Related reading
Paycheck calculator FAQ
Typically, employees prefer to get paid weekly. Getting paid more often (albeit in smaller amounts) can help better manage cash flow needs. This, in turn, reduces stress and improves wellbeing—both important factors present in a healthy work-life balance.
To calculate your net pay, or take-home pay, start with the gross amount you make each pay period. Then, use the IRS Form W-4 and a paycheck calculator (like the one on this page) to calculate the amount of money withheld from your paycheck for federal, state, and local taxes. You’ll also want to deduct any money you contribute to any company benefits programs, such as life insurance plans, 401(k)s, and health insurance.
Once you’ve correctly calculated all the deductions, you should be left with the right amount of net pay, or take-home pay.
An employee’s gross pay is the total amount they make before their employer makes any payroll deductions for taxes, company benefits, 401(k) plans, or any other entity. (This could include wage garnishment for a court-ordered child-support payment plan). The net pay, or take-home pay, is the amount of money an employee goes home with after an employer makes all paycheck deductions.
Which taxes should be withheld from employee paychecks?
Employers are required to withhold the following taxes from their employees' paychecks:
- Federal income tax
- State income tax (if required by your state)
- Medicare tax
- Social Security tax
As an employer, you deduct these taxes from your employees' wages each pay period and remit them to the IRS quarterly. You also need to send employees their W-2 or 1099 forms at the end of the year, plus file your business’s end-of-year taxes.
What is the payroll tax?
Employers are legally required to match their employees’ contributions to Medicare and Social Security taxes, otherwise known as FICA taxes. Employers (but not employees) also need to pay FUTA taxes, which contribute to the federal uninsurance employment fund. Sometimes, you’ll see FICA and FUTA taxes referred to collectively as the payroll tax (or payroll taxes).
Note that even household employers, or individuals who employ nannies, gardeners, or other household workers, must pay Medicare and Social Security taxes. Our paycheck calculator doesn’t calculate employer-specific payroll taxes.
Use payroll software to do the work
Disclaimer
At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.
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