Methodology
How we calculate every number
Every formula, rate, and bracket is traced to a primary government source. Here is exactly where each figure comes from.
Federal Income Tax
IRS Publication 15-TWe use the Percentage Method from IRS Publication 15-T, annualizing each paycheck's gross wages to determine the applicable 2026 bracket, then dividing the annual withholding by pay periods. The 2026 standard deductions are $15,000 (Single/MFS), $30,000 (MFJ), and $22,500 (Head of Household). Brackets run from 10% to 37%.
FICA Taxes (Social Security & Medicare)
SSA.govSocial Security is withheld at 6.2% on wages up to the SSA wage base ($176,100 for 2025; the 2026 base is announced by the SSA each October). Medicare is withheld at 1.45% on all wages, with an additional 0.9% on wages exceeding $200,000 (Single) or $250,000 (MFJ). Employer matches Social Security and Medicare dollar-for-dollar.
State Income Taxes
State Revenue DeptsWe source state rates directly from each state's Department of Revenue website. Progressive states — California, New York, New Jersey, Minnesota, Oregon, and Hawaii — use current bracket tables with income-band effective rates. Flat-rate states use official rates: Illinois 4.95%, Pennsylvania 3.07%, Utah 4.55%, Kentucky 4.00%, Michigan 4.05%, and others. Nine states have no state income tax: AK, FL, NV, NH, SD, TN, TX, WA, WY.
Overtime Calculations
DOL 29 CFR Part 778Overtime calculations follow FLSA regulations under 29 CFR Part 778. For non-exempt hourly employees, overtime is paid at 1.5× the regular rate for all hours worked over 40 in a workweek. For salaried non-exempt workers, we use the fluctuating workweek and half-time methods as defined in the regulations. California daily overtime (over 8 hours) and double-time rules are applied when CA is selected.
PTO Accrual Calculations
SHRM GuidelinesPTO accrual formulas follow SHRM (Society for Human Resource Management) guidelines and common employer practices. There is no federal mandate requiring PTO; our calculator models the four most common accrual methods: per-pay-period, per-hour-worked, annual lump sum, and anniversary-year accrual. State-specific mandatory leave laws (California, Colorado, Oregon, etc.) are noted where applicable.
Workers Compensation Rates
NCCI + State BureausWorkers comp rates are sourced from the National Council on Compensation Insurance (NCCI) classification codes and state-specific rating bureaus (WCIRB in California, NYSIF in New York, etc.). Rates vary by NCCI class code — the job classification that determines injury risk. Our calculator uses industry-standard class codes for the most common occupations and applies the state's published rate per $100 of payroll.
Update Schedule
When we update our rates
We review and update all calculators on a defined schedule tied to official government release cycles — not on an ad hoc basis.
Limitations
What our calculators do not cover
These calculators provide estimates. They are not a substitute for licensed payroll software, a CPA, or a payroll service bureau. The following situations fall outside our scope:
- Local city and county income taxes — NYC, Philadelphia, Yonkers, Detroit, and other municipalities levy additional local taxes not included in our state tax calculations.
- Special tax situations — Foreign earned income exclusion, Alternative Minimum Tax (AMT), net investment income tax, and expatriate situations require professional guidance.
- Employer-specific benefit programs — Non-standard deferred compensation, ESPP contributions, imputed income, and employer-specific benefit structures are not modeled.
- Garnishments and court-ordered deductions — Child support orders, IRS levies, student loan garnishments, and creditor judgments require separate calculation under federal and state garnishment limits.
Questions or corrections?
Found a rate that's out of date, or have a question about our methodology? We respond to every message.
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