Income & Tax Calculators

Understanding Payroll Deductions

Your gross salary is not what you'll actually receive. Various taxes and deductions reduce your take-home pay. Understanding these deductions helps you budget effectively and plan your finances.

Common payroll deductions include:

• Federal Income Tax: Based on tax brackets, ranging from 10% to 37%
• State Income Tax: Varies by state, from 0% to over 13%
• Social Security: 6.2% on income up to $160,200 (2023)
• Medicare: 1.45% on all income, plus 0.9% on income over $200,000
• Health Insurance: Employer-sponsored health insurance premiums
• Retirement Contributions: 401(k) or other retirement plan contributions

This calculator provides an estimate of your take-home pay. Actual amounts may vary based on additional deductions, exemptions, and specific tax situations. Consider consulting with a tax professional for personalized advice.

Maximizing Your Take-Home Pay

There are several legitimate strategies to optimize your tax situation and increase your take-home pay:

Pre-Tax Deductions

• 401(k) Contributions: Reduce taxable income while saving for retirement
• Health Savings Account (HSA): Triple tax advantage for medical expenses
• Flexible Spending Account (FSA): Pre-tax dollars for healthcare and childcare
• Health Insurance Premiums: Often deducted pre-tax

Tax Credits vs. Deductions

Tax Credits reduce your tax liability dollar-for-dollar, while deductions reduce your taxable income. Credits are generally more valuable:

• Child Tax Credit
• Earned Income Tax Credit
• American Opportunity Tax Credit
• Lifetime Learning Credit

Year-End Tax Strategies

• Maximize retirement contributions before year-end
• Consider tax-loss harvesting for investments
• Bunch deductions in alternating years
• Time income and expenses strategically

Understanding Capital Gains Tax

Capital gains tax applies when you sell investments, real estate, or other assets for more than you paid. The tax rate depends on how long you held the asset and your income level.

Short-Term vs. Long-Term Capital Gains

Short-Term Capital Gains (held for 1 year or less):

• Taxed as ordinary income at your marginal tax rate
• Can be as high as 37% for high earners
• No preferential treatment

Long-Term Capital Gains (held for more than 1 year):

• Preferential tax rates: 0%, 15%, or 20%
• Rate depends on your total income
• Significantly lower than ordinary income rates

2024 Long-Term Capital Gains Tax Rates

Capital Gains Tax Strategies

• Hold investments for over one year to qualify for long-term rates
• Tax-loss harvesting: Offset gains with losses
• Asset location: Hold high-growth investments in tax-advantaged accounts
• Timing: Realize gains in low-income years
• Charitable giving: Donate appreciated assets to avoid capital gains