How federal income tax is calculated for 2025
Start with gross wages, subtract pre-tax contributions such as a traditional 401(k), then subtract either the standard deduction or your itemized deductions. What remains is taxable income, and it is taxed in layers. For 2025 the standard deduction is $15,000 for single filers, $30,000 for married couples filing jointly and $22,500 for heads of household. The seven rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%; for a single filer the 10% bracket covers taxable income up to $11,925, the 12% bracket runs to $48,475, and the 22% bracket runs to $103,350.
Worked example: a single filer earning $75,000 with no 401(k) contribution and the standard deduction has taxable income of $60,000. Tax is 10% of $11,925 ($1,192.50) plus 12% of the next $36,550 ($4,386.00) plus 22% of the remaining $11,525 ($2,535.50), for a total of $8,114.00. The effective rate on gross wages is 10.8% even though the marginal bracket is 22%. Only the last dollars earned are taxed at the marginal rate, so a raise never leaves you with less money after tax.
FICA: Social Security and Medicare
Separately from income tax, employees pay 6.2% Social Security tax on wages up to the 2025 wage base of $176,100 and 1.45% Medicare tax on all wages. Wages above $200,000 (single or head of household) or $250,000 (married filing jointly) owe an additional 0.9% Medicare tax. Your employer matches the 6.2% and 1.45% but not the 0.9%. In the example above, FICA takes $4,650.00 for Social Security and $1,087.50 for Medicare, so total federal taxes are $13,851.50 and take-home pay before state tax is $61,148.50, about $5,096 a month.
Note that 401(k) contributions reduce income tax but not FICA; Social Security and Medicare are figured on gross wages. Pre-tax health insurance premiums and HSA contributions through a cafeteria plan reduce both, which is why they are slightly more valuable per dollar than a 401(k) deferral.
What this calculator leaves out
This is a wage-only estimate. It does not include tax credits, which reduce your bill dollar for dollar: the child tax credit is worth up to a few thousand dollars per qualifying child, and the earned income credit can be worth several thousand dollars to lower-income workers. It also ignores investment income, self-employment tax, the alternative minimum tax and the phase-outs that apply at higher incomes. Itemizing only helps if your deductible mortgage interest, state and local taxes (subject to an annual cap), charitable gifts and medical expenses exceed the standard deduction.
State income tax is not included because it ranges from zero in Texas, Florida, Washington and six other states to more than 10% at the top in California. Use the result here as the federal piece, then add your state. For withholding questions, the IRS Tax Withholding Estimator uses the same bracket math with your actual paycheck details.