How much are you really earning? Ubiquity's free Paycheck Calculator can help you determine your take-home pay–and how much you can afford to save in your 401(k).
Customize a simple, affordable retirement solution for your small business in just a few clicks.
Before investing in a 401(k) plan, you may wonder how it will affect your take-home pay.
The net income you receive each week can be calculated by taking gross wages and subtracting deductions like insurance premiums, federal/state/local taxes, and 401(k) contributions, as well as FICA Social Security and Medicare contributions. While making pretax retirement plan contributions will lower your take-home pay, it also invests money into a growth account with compounding interest and lowers your federal income taxes owed.
Try Ubiquity’s Paycheck Calculator for a quick, easy way to determine your take-home pay. Self-employed individuals can try our Solo 401(k) Calculator to see the future benefit of money saved today.
This amount is often shown as a line item on your pay stub. If not, you can calculate gross pay by:
FICA (also known as “payroll taxes”) is the contribution to Social Security and Medicare that every American pays into. The flat-rate deduction increases year-over-year based on inflation.
In 2022, the rate is 7.65% of earnings up to $147,000. The exact breakdown includes 6.2% for Social Security and 1.45% for Medicare. If you’re a high earner, you will owe an additional .9% Medicare tax on amounts over $200,000 (single) or $250,000 (joint).
Before calculating your income tax, the IRS used to allow personal exemptions based on claims made on one’s W4 form. However, the federal Tax Cuts and Jobs Act of 2017 canceled the personal exemption through at least 2025, increasing the standard deduction instead.
The 2021 standard deduction is:
The federal tax rate applies to your adjusted gross income. This is your gross annual pay from work PLUS dividends, interests, short-term capital gains, annuities and pensions, then subtracting for allowable deductions: the standard deduction (mentioned in the last step), educator expenses (up to $250), student loan interest (up to $2,500), alimony payments (100%), and contributions to a retirement account (up to $20,500 for those under 50 and $27,000 for those over 50 in 2022).
Deduct state and local taxes. Every state is different. You can find a rundown here.
Payroll deductions may include a healthcare premium for health/dental/vision, a monthly life insurance premium, and your 401(k) contributions.
Contributing to a 401(k) will set aside money for your future retirement, while reducing the amount of taxes owed today. If your company offers matching contributions, this is literally free money added onto your income that isn’t taxed until you withdraw it after age 59.5.
Contact Ubiquity to learn more about opening a Solo 401(k) or a Small Business 401(k).
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44 Montgomery Street, Suite 300
San Francisco, CA 94104
Support: 855.401.4357
© 2023 Ubiquity Retirement + Savings
Privacy Policy
Do not sell my info
44 Montgomery Street, Suite 300
San Francisco, CA 94104
Support: 855.401.4357