Percentage Taken Out for Taxes on Paycheck?

Answer

Unless you're a certified accountant, dealing with income taxes can be a daunting task. Something as simple as discovering what percentage of your paycheck will be withheld can seem totally overwhelming. But it's OK, you can do it. Take a deep breath, follow the steps below, and you'll have a decent estimate of what to expect in the way of income tax withholding on your paycheck.

  1. Before beginning your calculations, make sure you know the answer to the following question: how many allowances did you file for on your W-4?

  2. The Social Security tax rate for 2012 is 6.2%. Take a look at your paycheck and multiply your gross income (that's the total amount you've been paid before taxes come out) by .062. We'll call the result of this calculation A.

  3. The Medicare tax rate for 2012 is 1.45%. Multiply your gross income by .0145%. This result will be known as B.

  4. Now, consider the W-4 status you determined in question 1. Let's say you're married, filing jointly, and have a combined income of $80,000 per year. In this case each allowance on your W-4 is worth $950. Multilply your number of allowances by $950, and you'll have result C. (To find out your exact allowance, you'll need to consult a full W-4 allowance table for 2012)

  5. Divide result C by the number of pay periods you have in a year. If you're paid biweekly, there should be about 26 pay periods. If you're paid monthly, then there are 12. The result of this calculation is result D.

  6. Now add together results A, B and D. We'll call the result E.

  7. Finally, subtract result E from your gross income on your paycheck. The answer should be an estimation of exactly how much money will be withheld from each paycheck for federal tax purposes.

If you want to know what percentage this is of each paycheck, you can divide this amount by your gross income, and the result will be the total percentage. Remember that this will only tell you the percentage taken out of your paycheck for federal tax purposes. State taxes vary greatly from state to state. Some states, like Florida, Nevada, and Texas, don't have any income taxes. In those cases, you're in luck—no more math for the day!
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