How we calculate
Tax year 2026 · Last updated:
This page explains TakeHome’s annual ordinary income-tax estimate, its simplifying assumptions, state coverage tiers, and where the averaged results can diverge from a real paycheck or tax return. Read it together with our Disclaimer & Terms of Use.
1. Purpose
TakeHome estimates employee take-home pay for educational comparison — for example, comparing two job offers or two states. It is not payroll software, not tax-preparation software, and not an official IRS or state calculator.
When a number on your employer stub, a tax pro’s worksheet, or an agency tool disagrees with ours, treat our figure as the one that needs checking, not as the authority.
2. Calculation pipeline
At a high level, each run follows this sequence:
- Convert your gross input into an annualized gross (and a per-period gross using your pay frequency)
- Subtract modeled pre-tax amounts (traditional 401(k) and generic other pre-tax amounts use different simplified tax treatment)
- Estimate employee FICA (Social Security and Medicare); traditional 401(k) does not reduce FICA wages
- Estimate annual federal ordinary income tax from wage income using a basic standard deduction before credits
- Estimate state income tax according to the selected state’s coverage tier
- Subtract optional post-tax amounts
- Report annual net and an average per pay period, plus a breakdown, assumptions, warnings, and explanation steps
3. Annual estimate only
Employer withholding is out of scope
TakeHome does not implement IRS Publication 15-T employer withholding, W-4 worksheets, year-to-date reconciliation, or state employer withholding tables.
Annualized average
We expose one annual ordinary income-tax estimate. Annual net is divided by the selected pay-period count for display, so each per-period value is an average rather than a prediction of any specific paycheck.
Actual payroll and a filed return can both differ materially from this estimate.
4. Federal income tax (simplified)
The federal estimate assumes wage income and applies progressive ordinary-income brackets plus a basic standard deduction keyed to filing status for tax year 2026, before credits.
We omit itemized deductions, tax credits (Child Tax Credit, education credits, etc.), AMT, NIIT, capital-gains stacking, and multi-job coordination. Traditional 401(k) reduces modeled federal and state taxable income but does not reduce FICA wages; generic other pre-tax deductions use the simplified treatment disclosed with the result.
5. FICA (Social Security & Medicare)
Employee Social Security is modeled at 6.2% up to the configured annual wage base. Employee Medicare is 1.45%, plus 0.9% above Additional Medicare thresholds: Single/HOH $200,000, MFJ $250,000, and MFS $125,000.
Traditional 401(k) does not reduce FICA wages. Generic other pre-tax amounts are assumed to reduce FICA wages as a simplification. Employer-side FICA, special wage types, and payroll reconciliation are out of scope.
6. State & local tax coverage
Coverage has three tiers. Verified means state income-tax treatment was checked for this limited scope; provisional means a directional estimate with missing-item warnings; federal-only means the state is unsupported and only federal income tax + FICA are shown.
Texas and Florida are verified only for their zero-state-personal-income-tax scope. California, New York, Illinois, Pennsylvania, Washington, and Georgia are provisional. Unsupported states are federal-only.
Major omissions include CA SDI, NY Paid Family Leave/Disability deductions, WA Paid Family and Medical Leave/WA Cares, PA local EIT/LST, and most local taxes. Optional NYC local income tax is simplified. Read every on-screen warning.
7. Inputs we accept (and ignore)
Supported inputs include gross amount and unit (annual, period, or hourly), pay frequency, state, filing status, traditional 401(k) percentage, optional other pre-tax / post-tax amounts, and NYC resident (NY only).
We do not currently model HSA/FSA detail beyond a generic “other pre-tax” field, Roth vs traditional nuances beyond the traditional 401(k) control, equity compensation, separate bonus payroll treatment, tips, self-employment income, or dual-state remote work.
8. Period conversion & rounding
We use standard period counts: weekly 52, biweekly 26, semimonthly 24, monthly 12. Hourly gross annualizes as rate × hours/week × 52 (default 40 hours if blank).
Currency amounts are rounded to cents for display. Small differences versus payroll systems often come from rounding order and mid-year timing.
9. Sources & maintenance
Engine constants are maintained toward the labeled tax year and are inspired by public IRS / SSA / state frameworks (brackets, standard deduction style amounts, FICA rates and wage base, simplified state schedules). They are educational approximations and may lag or simplify official publications.
When agencies publish inflation adjustments or rate changes, we update the engine and revise this page’s “Last updated” date. See the changelog below for notable revisions.
Authoritative references for users verifying numbers include IRS tax publications, SSA wage-base announcements, and the relevant state department of revenue.
10. Changelog
- 2026-07-21 — Exposed annual estimates only; added coverage tiers, per-period averaging disclosure, deduction assumptions, missing-item warnings, and domain-error handling.
- 2026-07-19 — Initial public methodology for MVP.