2025 Federal Hourly Paycheck Calculator

You are tax-exempt when you do not meet the requirements for paying tax. This usually happens because your income is lower than the tax threshold (also known as the standard deduction). For 2024, you need to make less than:

• single filer or married filing separately: $14,600
• married joint filers: $29,200
• head of household: $21,900

If you are 65 or older, or if you are blind, different income thresholds may apply. Check the IRS Publication 505 for current laws.

Claiming exempt from federal tax withholding on your W4 when you aren’t eligible isn’t illegal but it can have major consequences. You might receive a large tax bill and possible penalties after you file your tax return.

The more taxable income you have, the higher tax rate you are subject to. This calculation process can be complex, so PaycheckCity’s free calculators can do it for you! To learn how to manually calculate federal income tax, use these step-by-step instructions and examples.

The federal income tax is a tax on annual earnings for individuals, businesses, and other legal entities. All wages, salaries, cash gifts from employers, business income, tips, gambling income, bonuses, and unemployment benefits are subject to a federal income tax.

For each payroll, federal income tax is calculated based on the answers provided on the W-4 and year to date income, which is then referenced to the tax tables in IRS Publication 15-T. For 2024, rates are 0%, 10%, 12%, 22%, 24%, 32%, 35%, or 37%.

You filled out a W-4 form when you were hired. The W4 form determines the amount of federal income tax withheld from your paycheck. Completing it accurately ensures proper withholding. States have their own state withholding forms too.

FICA (Federal Insurance Contributions Act) includes 2 taxes: Social Security and Medicare. Both Social Security and Medicare taxes are deducted from each paycheck to fund these important government programs.

Social Security tax is 6.2% on $147,000 of earned income. The maximum Social Security tax for employees is $9,114.

Medicare tax is 1.45%. There is a 0.9% Additional Medicare Tax for employees on wages earned after $200,000 ($250,000 for married filing jointly, or $125,000 for married filing separately). This means when an employee’s income reaches that threshold in a calendar year, the employer should withhold 2.35% total for Medicare. Learn more about Social Security and Medicare taxes.

In addition to withholding federal and state taxes, part of your gross income might also have to contribute to deductions. These are known as “pre-tax deductions” and include contributions to retirement accounts and some health care costs. For example, when you look at your paycheck you might see an amount deducted for your company’s health insurance plan and for your 401k plan. Pre-tax deductions result in lower take-home, but also means less of your income is subject to tax. Some deductions are “post-tax”, like Roth 401(k), and are deducted after being taxed.

In our calculators, you can add deductions under “Benefits and Deductions” and select if it’s a fixed amount, a percentage of the gross-pay, or a percentage of the net pay. For hourly calculators, you can also select a fixed amount per hour. For pre-tax deductions, check the Exempt checkboxes, meaning the deduction will be taxed.

In 2020, the IRS updated the Federal W4 form that eliminated withholding allowances. The redesigned Form W4 makes it easier for your withholding to match your tax liability. Here’s how to answer the new questions:

• Step 2: check the box if you have more than one job or you and your spouse both have jobs. This will increase withholding.
• Step 3: enter an amount for dependents.The old W4 used to ask for the number of dependents. The new W4 asks for a dollar amount. Here’s how to calculate it: If your total income will be $200k or less ($400k if married) multiply the number of children under 17 by $2,000 and other dependents by $500. Add up the total.
• Step 4a: extra income from outside of your job, such as dividends or interest, that usually don't have withholding taken out of them. By entering it here you will withhold for this extra income so you don't owe tax later when filing your tax return.
• Step 4b: any additional withholding you want taken out. Any other estimated tax to withhold can be entered here. The more is withheld, the bigger your refund may be and you’ll avoid owing penalties.

If your W4 on file is in the old format (2019 or older), toggle "Use new Form W-4" to change the questions back to the previous form. Employees are currently not required to update it. However if you do need to update it for any reason, you must now use the new Form W-4.

Explore deductions and credits available, such as contributions to retirement accounts, to potentially lower your taxable income.