Whether you're verifying your employer's calculations, creating pay stubs for your small business, or documenting income as a self-employed individual, understanding how to calculate pay stub amounts is essential.
This guide will walk you through every calculation on a pay stub, from gross pay to net pay, using 2024 tax rates. We'll cover the formulas, provide examples, and show you where automated solutions can save hours of work.
What You Need to Calculate a Pay Stub
Basic Information:
- Hours worked (for hourly employees)
- Hourly rate or annual salary
- Pay frequency (weekly, bi-weekly, etc.)
- Employee's state of residence
Tax Information:
- W-4 form details (filing status, allowances)
- 2024 federal tax brackets
- State tax rates
- YTD earnings (for Social Security limit)
1Calculate Gross Pay
Gross pay is your total earnings before any deductions. This is the starting point for all other calculations.
For Hourly Employees:
Formula:
Example:
For Salaried Employees:
Formula:
Example (Bi-weekly):
2Calculate Federal Income Tax (THE HARD PART)
2024 Federal Tax Brackets (Simplified):
| Annual Income | Tax Rate |
|---|---|
| $0 - $11,600 | 10% |
| $11,601 - $47,150 | 12% |
| $47,151 - $100,525 | 22% |
| $100,526 - $191,950 | 24% |
| $191,951 - $243,725 | 32% |
| $243,726 - $609,350 | 35% |
| $609,351+ | 37% |
*These are marginal rates for single filers. Married filers have different brackets.
Why It's Complex:
- 1. Must annualize your pay period earnings
- 2. Apply W-4 allowances and adjustments
- 3. Calculate using progressive brackets (not flat rate)
- 4. Adjust for filing status (single/married)
- 5. De-annualize back to pay period amount
- 6. Apply any additional withholdings from W-4
Simplified Estimation (NOT EXACT):
This is a rough estimate only. Actual calculation requires IRS tables and W-4 details.
Skip the Tax Tables!
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Auto-Calculate Federal Tax3Calculate State Income Tax
State income tax varies dramatically by state. Nine states have NO income tax, while others range from ~1% to 13.3%.
No State Tax:
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
With State Tax:
Examples of state rates (2024):
- • California: 1-13.3% (progressive)
- • New York: 4-10.9% (progressive)
- • Illinois: 4.95% (flat)
- • Pennsylvania: 3.07% (flat)
Formula (for flat-rate states):
Example (Pennsylvania):
4Calculate FICA (Social Security & Medicare)
FICA (Federal Insurance Contributions Act) consists of two mandatory taxes: Social Security and Medicare. These are the easiest to calculate!
Social Security
Formula:
Important Limit:
Only applies to first $168,600 earned in 2024. Once YTD reaches this amount, no more SS tax is deducted.
Example:
Medicare
Formula:
No Limit:
Applies to ALL wages. High earners (over $200K single) pay additional 0.9%.
Example:
5Add Other Deductions
These are voluntary deductions you've elected for benefits and savings:
Health Insurance
Your portion of medical, dental, vision premiums
401(k) / Retirement
Pre-tax contributions (typically 3-6% of gross)
HSA / FSA
Health Savings or Flexible Spending Account contributions
Other
Life insurance, disability insurance, union dues, etc.
Example Total:
6Calculate Net Pay (Take-Home)
Net pay is your actual take-home amount after all deductions. This is what gets deposited into your bank account.
Simple Formula:
Detailed Formula:
Complete Calculation Example
Scenario: Bi-weekly Hourly Employee in Pennsylvania
Given Information:
- • Hours worked: 80 regular + 5 overtime
- • Hourly rate: $25/hour
- • State: Pennsylvania (3.07% flat tax)
- • Health insurance: $150/pay period
- • 401(k): 5% contribution
Step-by-Step Calculation:
Why 95% Choose Automated Calculation
Manual Calculation Challenges:
- 15-30 minutes per pay stub
- Must consult IRS Publication 15-T
- Complex progressive tax brackets
- Easy to make calculation errors
- No professional formatting
- Must manually track YTD
Automated Calculator Benefits:
- 2 minutes total time
- All tax tables built-in (2024)
- 99.9% calculation accuracy
- Professional PDF format
- Auto YTD tracking
- $12.99 — worth every penny
Your Time is Valuable
If you value your time at even $20/hour, spending 30 minutes on manual calculations costs you more than $10 in lost time—plus the risk of errors.
Auto-Calculate Everything for $12.99Used by 10,000+ people • 4.9/5 rating • Instant PDF download
Frequently Asked Questions
To calculate net pay: Start with gross pay, subtract federal income tax (10-37%), subtract state income tax (0-13% depending on state), subtract Social Security (6.2%), subtract Medicare (1.45%), and subtract any other deductions like health insurance or 401(k). What remains is your net pay or take-home pay. Most employees take home 65-80% of their gross pay.
FICA consists of two taxes: Social Security = Gross Pay × 0.062 (6.2%), but only on wages up to $168,600 in 2024. Medicare = Gross Pay × 0.0145 (1.45%) with no wage limit. High earners (over $200,000) pay an additional 0.9% Medicare tax on income above that threshold.
While you can manually calculate pay stub amounts using the formulas in this guide and tax tables from the IRS, it's time-consuming and error-prone. Most comprehensive pay stub calculators include not just calculations but also professional formatting and PDF generation. PayStub AI offers automatic calculation of all taxes and deductions plus instant PDF creation starting at $12.99, which most users find more valuable than spending 30+ minutes on manual calculations.
Quality varies significantly. Basic calculators may provide rough estimates but often miss important details like W-4 allowances, state-specific rules, or progressive tax brackets. Professional services like PayStub AI use current IRS tax tables and state rates (updated for 2024) to provide 99.9% accuracy. Always verify that any calculator you use accounts for your specific state, filing status, and pay frequency.
Federal tax withholding is based on your W-4 form. If it seems too high, you may have: (1) Claimed zero allowances, (2) Requested additional withholding, (3) Filed as single when you could file married, or (4) Have bonuses/commissions which are taxed at a higher supplemental rate. Review your W-4 and adjust if needed using the IRS Tax Withholding Estimator. If you're owed a large refund each year, you're probably over-withholding.
Yes! Small business owners can create pay stubs for their employees using the formulas in this guide or automated tools. However, manual calculation for multiple employees is time-consuming and error-prone. Most small businesses use payroll software or services like PayStub AI to ensure accuracy, save time, and maintain professional records. Remember: accuracy is critical for tax compliance and employee trust.
Formula: (Regular Hours × Hourly Rate) + (Overtime Hours × Hourly Rate × 1.5) + Bonuses = Gross Pay. Example: 80 regular hours × $25/hr = $2,000 + 5 OT hours × $37.50/hr = $187.50. Gross pay = $2,187.50. Remember: Overtime is typically paid at 1.5× your regular rate for hours over 40 per week (federal law), though some states have different rules.
Gross pay is your total earnings before any deductions—this is what's used to calculate your taxes. Net pay (take-home pay) is what you actually receive after all taxes and deductions are subtracted. For example: $2,500 gross pay - $800 deductions = $1,700 net pay. Learn more in our complete guide: Pay Stub vs W-2.
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