Paycheck Calculator - California

Instruction for This Paycheck Calculator

This free paycheck calculator makes it easy for you to calculate an estimated take-home income amount for your paycheck. We also build in the latest federal and state tax rates on the calculator to improve the accuracy. Please follow the short guidance to calculate your take home paycheck amount:

1. Please select your marital status: Single or Married.
2. Choose your pay frequency.
3. Enter the number of allowances found on your W-4 form, which determines the additional amount withheld from your paycheck.
4. Indicate whether you are paid Hourly or on a Salary basis and input the corresponding figure. Include overtime wages, if applicable.
5. Provide any Additional Withholdings, or leave the field blank if not applicable.
6. Input Pre-Tax Deductions as an amount or percentage, or leave blank if the information is not available.
7. Input Post-Tax Deductions as an amount or percentage, or leave blank if the information is not available.
8. Select "Yes" and specify any tax exemptions, or choose "No" if not applicable.

How to Calculate Net Income

1. Determine taxable income by deducting any pre-tax contributions to benefits
2. Withhold all applicable taxes (federal, state and local)
3. Deduct any post-tax contributions to benefits
4. Garnish wages, if necessary
5. The result is net income

California Paycheck Quick Facts

• California income tax rate: 1.00% - 13.30%
• Median household income in California: $81,575
• Number of cities that have local income taxes: 1

California State Income Tax

California employs a progressive income tax system, featuring nine tax brackets ranging from 1% to 12.3%. Incomes exceeding $1 million are subject to an additional 1% surcharge. The state offers a standard deduction of $5,202 for single filers and those married filing separately, while all other filing statuses receive a $10,404 deduction. The deadline for California state income tax filing is April 18, 2023, or October 16, 2023, with an extension. Residents of counties affected by a declared natural disaster may also have until October 16, 2023, to file their taxes.

The income tax brackets below show the specific tax rates for taxpayers:

Federal Tax and Marginal Rates

IRS income tax is mandatory and it makes adjustments for the tax brackets each tax year. Here is the quote from IRS for Tax Year 2022:

“Marginal Rates: For tax year 2022, the top tax rate remains 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly).

The other rates are:
35%, for incomes over $215,950 ($431,900 for married couples filing jointly);
32% for incomes over $170,050 ($340,100 for married couples filing jointly);
24% for incomes over $89,075 ($178,150 for married couples filing jointly);
22% for incomes over $41,775 ($83,550 for married couples filing jointly);
12% for incomes over $10,275 ($20,550 for married couples filing jointly).
The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).”

Federal marginal tax rates refer to the rates at which income is taxed within the federal income tax system in a progressive manner. In the United States, the federal income tax system is designed with multiple tax brackets, each of which corresponds to a specific range of income levels. As your income increases, so do the tax rates you pay, but only for the income within that specific bracket.

Here's a simplified example to illustrate the concept. Suppose we have three tax brackets:

1. 10% tax rate for income up to $10,000

2. 20% tax rate for income between $10,001 and $50,000

3. 30% tax rate for income above $50,000

Now, if you earn $60,000 in a year, you won't be taxed at a flat 30% on your entire income. Instead, your income will be taxed at the marginal rates for each bracket:

• The first $10,000 of your income will be taxed at 10% (resulting in $1,000 in taxes).
• The next $40,000 of your income (from $10,001 to $50,000) will be taxed at 20% (resulting in $8,000 in taxes).
• The remaining $10,000 of your income (from $50,001 to $60,000) will be taxed at 30% (resulting in $3,000 in taxes).

So, your total tax liability would be $1,000 + $8,000 + $3,000 = $12,000.

Marginal tax rates ensure that higher-income individuals pay a larger percentage of their income in taxes, but only for the portion of their income that falls within the higher tax brackets.

FICA Withholding

FICA is a two-part tax. Both employees and employers pay 1.45% for Medicare and 6.2% for Social Security. The latter has a wage base limit of $160,200, which means that after employees earn that much, the tax is no longer deducted from their earnings for the rest of the year. Those with high income may also be subject to Additional Medicare tax, which is 0.9%, paid for only by the employee, not the employer.

Deductions

If you reside in a state or city that imposes income taxes, these taxes will influence your net income. Similar to federal income taxes, your employer will retain a portion of each paycheck to account for state and local taxes. Consequently, understanding the tax rates and regulations for your specific location can help you better anticipate the impact on your overall take-home pay.

Local Income Tax

Local income tax is a tax levied by local government entities, such as cities or counties, on an individual's earned income. This tax is separate from federal and state income taxes and serves as a source of revenue for local governments to fund public services, infrastructure, and other community needs. The rate of local income tax varies depending on the jurisdiction, with some areas having higher rates than others. Taxpayers are typically required to file a local income tax return in addition to federal and state returns, though specific filing procedures and exemptions may differ by locality.

Maximising Your Paycheck

Getting the most out of your paycheck involves managing your finances wisely and taking advantage of available tax breaks, deductions, and benefits. Here are some tips to help you maximise your earnings:

Review your withholding:

Make sure the appropriate amount of taxes is being withheld from your paycheck. Adjust your withholding allowances on Form W-4 with your employer if necessary.

Contribute to a retirement plan:

If your employer offers a 401(k) or similar retirement plan, consider contributing to it, especially if your employer matches your contributions. This not only reduces your taxable income but also helps you save for the future.

Use flexible spending accounts (FSAs) or health savings accounts (HSAs):

These accounts allow you to set aside pre-tax dollars for qualified medical and dependent care expenses. By using these accounts, you can lower your taxable income and save money on healthcare costs.

Take advantage of employee benefits:

Make sure you're using all the benefits provided by your employer, such as health insurance, life insurance, and commuter benefits. These can save you money and improve your overall financial situation.

Take advantage of tax deductions and credits:

Familiarise yourself with tax deductions and credits that may apply to your situation, such as student loan interest deductions, the child tax credit, or the earned income tax credit. These can reduce your tax liability and increase your take-home pay.

Consider speaking with a financial advisor:

This is one of the surest ways to make sure you're setting up the right allowances, deductions and withholdings.