Paycheck & Tax Glossary
Plain-English definitions of take-home pay, tax rates, deductions, and paycheck terminology — everything you need to understand your salary.
20 terms · Updated for 2026
401(k)
An employer-sponsored retirement plan allowing pre-tax or post-tax (Roth) contributions.
A 401(k) is a workplace retirement savings plan. Traditional 401(k) contributions are pre-tax, reducing your current taxable income. Roth 401(k) contributions are after-tax, providing tax-free withdrawals in retirement. The 2026 contribution limit is $23,500 (plus $7,500 catch-up for those 50+). Contributions lower your take-home pay but reduce your current tax bill (traditional) or future tax bill (Roth).
Related: Pre-Tax Deductions, Taxable Income
Biweekly Pay
Paid every two weeks — 26 paychecks per year.
Biweekly pay means you receive a paycheck every two weeks, resulting in 26 paychecks per year. Annual salary ÷ 26 = gross biweekly check. Biweekly is the most common pay frequency in the US. Two months per year will have three paychecks instead of two — a useful budgeting consideration.
Example
$75,000/year biweekly gross = $2,884.62 per check. After taxes (Texas), approximately $2,300/check.
Related: Take-Home Pay, Gross Pay
Effective Tax Rate
The actual average percentage of your income you pay in taxes.
Your effective tax rate is the percentage of your total gross income paid in taxes — calculated by dividing total tax paid by total gross income. Because the US uses a progressive bracket system, your effective rate is always lower than your marginal (top bracket) rate. The effective rate is the most accurate measure of your overall tax burden.
Example
On a $100K salary in Texas: federal tax of $14,327 + FICA of $7,650 = $21,977 total / $100,000 = 22.0% effective rate.
Related: Marginal Tax Rate, Federal Income Tax
Federal Income Tax
Tax paid to the US federal government on earned income, calculated using progressive brackets.
Federal income tax is the largest tax most workers pay. It is calculated by applying progressive bracket rates to taxable income (gross salary minus the standard deduction or itemized deductions). For 2026, the standard deduction for single filers is $16,100. Federal tax is the same regardless of which state you live in.
Example
On a $100K salary, standard deduction of $16,100 leaves $83,900 taxable. Federal tax ≈ $14,327.
Related: Tax Bracket, Standard Deduction, FICA
FICA
Federal Insurance Contributions Act — includes Social Security and Medicare taxes.
FICA is the combined payroll tax covering Social Security (6.2% on wages up to $184,500 in 2026) and Medicare (1.45% on all wages, plus 0.9% on wages over $200,000). FICA taxes are the same regardless of state or filing status. Employers match the employee share, but employees only see their own portion withheld.
Example
On a $100K salary: Social Security = $6,200 · Medicare = $1,450 · Total FICA = $7,650.
Related: Social Security Tax, Medicare Tax
Flat Tax
A state income tax system using a single rate on all taxable income.
Several US states use a flat rate — a single percentage applied to all (or most) taxable income regardless of earnings. Examples: Illinois 4.95%, Pennsylvania 3.07%, Colorado 4.40%, Massachusetts 5.00%. Flat tax states are simpler to calculate than progressive bracket states. The effective state rate equals the flat rate (before deductions/exemptions).
Related: State Income Tax, Progressive Tax
Filing Status
Your IRS-defined category that determines your tax brackets and standard deduction.
Filing status determines which tax brackets and standard deduction apply to you. The five federal statuses are: Single, Married Filing Jointly (MFJ), Married Filing Separately (MFS), Head of Household (HOH), and Qualifying Surviving Spouse (QSS). MFJ has wider brackets and a larger standard deduction than single — often resulting in lower taxes for couples. TakeHomeUSA defaults to single filer.
Related: Tax Bracket, Standard Deduction
Gross Pay
Your total salary or wages before any taxes or deductions.
Gross pay is the total amount your employer agrees to pay you — for example, $75,000/year or $25/hour. It is the starting point for all tax calculations. Gross pay is higher than take-home pay because taxes have not yet been subtracted. When salary is advertised in a job posting, it is always the gross amount.
Example
A job offer of $80,000 means $80,000 gross — your actual take-home will be lower after taxes.
Related: Take-Home Pay, Net Pay
Marginal Tax Rate
The tax rate applied to the next dollar you earn — your top bracket rate.
The marginal tax rate is the rate applied to your highest dollar of income. In a progressive system, only the income above a threshold is taxed at the higher rate — not all income. For example, if your marginal rate is 22%, that rate only applies to income above the 12% bracket ceiling. Your first dollars of income are still taxed at 10% and 12%.
Example
A single filer earning $100,000 has a 22% federal marginal rate — but their effective rate is approximately 15.4% because lower brackets apply to earlier income.
Related: Effective Tax Rate, Federal Income Tax, Tax Bracket
Medicare Tax
1.45% payroll tax on all wages, with an additional 0.9% on wages over $200K.
Medicare tax is part of FICA. Unlike Social Security, there is no wage base cap — 1.45% applies to all earned wages. High earners (over $200,000 single) also pay an Additional Medicare Tax of 0.9%, for a combined 2.35% above that threshold. Medicare funds healthcare for those 65 and older.
Related: FICA, Social Security Tax
Net Pay
Synonymous with take-home pay — your pay after all deductions.
Net pay and take-home pay mean the same thing: the amount deposited in your account after all taxes and withholdings are subtracted. Net pay = Gross pay − Federal income tax − State income tax − Social Security − Medicare − any other voluntary deductions (health insurance premiums, 401k contributions, etc.).
Related: Take-Home Pay, Gross Pay
No Income Tax States
The 9 US states that levy no state income tax on wages.
Nine states have no state income tax on wages: Alaska, Florida, Nevada, New Hampshire (wages only — investment income is taxed), South Dakota, Tennessee, Texas, Washington, and Wyoming. Residents of these states pay only federal income tax and FICA — keeping thousands more per year compared to high-tax states. On a $100K salary, this means approximately $6,000–$13,000 more per year than California.
Related: State Income Tax, Take-Home Pay
Pre-Tax Deductions
Contributions that reduce taxable income before taxes are calculated (401k, HSA, health insurance).
Pre-tax deductions are amounts deducted from your paycheck before tax is calculated. Common examples: Traditional 401(k) contributions, HSA contributions, employer-sponsored health insurance premiums (Section 125). These reduce your taxable income, lowering both federal income tax and sometimes FICA. Roth 401k contributions are post-tax and do not reduce taxable income.
Example
Contributing $10,000 to a 401k on a $100K salary: taxable income drops to $90,000, reducing federal tax by approximately $2,200.
Related: Taxable Income, 401(k)
Progressive Tax
A tax system where higher incomes pay higher percentage rates — but only on the income above each threshold.
A progressive tax system uses increasing rates for increasing income bands. The US federal income tax is progressive: you pay 10% on the first bracket, 12% on the next, 22% above that, and so on — but each rate applies only to the income within its bracket, not to your total income. This means your overall effective rate is always lower than your top marginal bracket.
Related: Tax Bracket, Marginal Tax Rate, Effective Tax Rate
State Income Tax
Tax paid to your state government on earned income — varies dramatically by state.
State income tax is levied by most (but not all) US states on residents' earned income. Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire (wages only), South Dakota, Tennessee, Texas, Washington, and Wyoming. Other states range from flat rates (e.g., Pennsylvania 3.07%) to progressive schedules reaching 13.3% in California.
Example
On a $100K salary: Texas = $0 state tax; California = approximately $7,420 state tax; New York = approximately $6,821 state tax.
Related: No Income Tax States, Take-Home Pay
Standard Deduction
A flat amount subtracted from gross income before federal tax is calculated.
The standard deduction reduces taxable income without requiring itemization of expenses. For 2026: single filers $16,100 · Married filing jointly $32,200 · Head of household $24,200. Most taxpayers use the standard deduction because it is simpler and often larger than their itemized deductions. TakeHomeUSA defaults to the standard deduction.
Example
On a $75,000 salary: $75,000 − $16,100 = $58,900 taxable income, which then gets progressive federal brackets applied.
Related: Federal Income Tax, Taxable Income
Take-Home Pay
The money you actually receive in your bank account after all taxes are withheld.
Take-home pay (also called net pay) is your gross salary minus all taxes withheld: federal income tax, state income tax (if applicable), Social Security, and Medicare. It is what you actually have to spend, save, or invest. Take-home pay is always less than gross pay for any taxable wage income.
Example
On a $100,000 salary in Texas (no state tax), take-home pay is approximately $79,180/year or $6,598/month after all federal and FICA taxes.
Tax Bracket
An income range taxed at a specific rate under the progressive federal system.
Federal income tax is calculated using progressive brackets. For 2026 single filers, the brackets are: 10% ($0–$11,925), 12% ($11,926–$48,475), 22% ($48,476–$103,350), 24% ($103,351–$197,300), 32% ($197,301–$250,525), 35% ($250,526–$626,350), 37% (over $626,350). Only the income within each bracket is taxed at that rate.
Example
A $60,000 salary: first $11,925 is taxed at 10%, next $36,549 at 12%, remaining $11,525 at 22%.
Related: Marginal Tax Rate, Federal Income Tax, Progressive Tax
Taxable Income
Gross salary minus standard (or itemized) deductions — the base for federal tax calculation.
Taxable income is the amount your federal income tax brackets are applied to. It is calculated as: Gross Income − Standard Deduction (or itemized deductions) − Pre-tax deductions (401k, HSA, health insurance). A lower taxable income means less federal income tax — which is why pre-tax retirement contributions can reduce your tax bill.
Related: Standard Deduction, Federal Income Tax, Pre-Tax Deductions
Now put the numbers to work
Enter your salary and see your exact take-home pay — using all the terms above.
Social Security Tax
6.2% payroll tax on wages up to the annual wage base ($184,500 in 2026).
Social Security tax is part of FICA. The employee pays 6.2% on earned wages up to the annual wage base ($184,500 for 2026). No Social Security tax is owed on wages above this ceiling. The funds go to the Social Security trust funds for retirement and disability benefits.
Related: FICA, Medicare Tax