Your salary and your paycheck are two very different numbers. Understanding the gap helps you spot mistakes, plan your budget and make smarter choices about benefits.
Gross pay vs net pay
Gross pay is what you earn before anything comes out. Net pay, or take-home pay, is what actually lands in your bank account. Everything in between is taxes and deductions.
Taxes on every paycheck
- Federal income tax is based on your W-4 and the 2026 brackets, which run from 10% to 37%.
- Social Security is 6.2% of your wages, up to $184,500 in 2026.
- Medicare is 1.45% of all wages, plus an extra 0.9% on wages above $200,000.
- State and local income tax depends on where you work and, in some places, where you live.
Pre-tax deductions
Some deductions come out before taxes are calculated, which lowers your tax bill. Common ones include traditional 401(k) contributions, health, dental and vision premiums, and HSA or FSA contributions. A 401(k) reduces income tax but not Social Security and Medicare; most health premiums reduce both.
Why your state matters
Two single workers each earn $60,000 a year, paid every two weeks:
- Take-home in Texas (no state income tax)
- $1,938.08 per paycheck
- Take-home in California
- $1,844.64 per paycheck
- Difference per year
- $2,429
That gap comes from California’s income tax and its State Disability Insurance. Of course, taxes are only part of the picture: housing, wages and sales taxes also vary widely from state to state.