Understanding Your NYC Paycheck: A Comprehensive Guide
Navigating your paycheck can be complex, especially when you live and work in New York City. Beyond federal taxes, NYC residents face state and city income taxes, along with mandatory FICA contributions. This guide breaks down the components of your NYC paycheck, helping you understand where your money goes.
Gross Pay
Your gross pay is your total earnings before any deductions. This is the amount you agree upon with your employer, whether it's an annual salary, hourly wage, or commission. The calculator above uses your Gross Annual Salary to determine your gross pay per pay period based on your chosen frequency (weekly, bi-weekly, semi-monthly, or monthly).
Pre-tax Deductions
Pre-tax deductions are amounts taken from your gross pay before taxes are calculated. These deductions reduce your taxable income, meaning you pay less in federal, state, and city income taxes. Common pre-tax deductions include:
401(k) or 403(b) contributions: Retirement savings plans.
Health, dental, and vision insurance premiums: Employer-sponsored health benefits.
Flexible Spending Accounts (FSAs) or Health Savings Accounts (HSAs): Accounts for healthcare expenses.
Commuter benefits: Funds set aside for public transportation or parking.
The calculator allows you to input your total annual pre-tax deductions, which are then prorated per pay period.
FICA Taxes (Social Security & Medicare)
FICA stands for Federal Insurance Contributions Act, and it funds Social Security and Medicare programs. These are mandatory federal taxes:
Social Security: As of 2024, employees contribute 6.2% of their earnings up to an annual wage base limit of $168,600. Earnings above this limit are not subject to Social Security tax.
Medicare: Employees contribute 1.45% of all earnings, with no wage base limit. Additionally, an Additional Medicare Tax of 0.9% applies to earned income exceeding certain thresholds ($200,000 for single filers, $250,000 for married filing jointly, $125,000 for married filing separately).
These taxes are calculated on your gross pay before any pre-tax deductions are applied.
Federal Income Tax
Federal income tax is a progressive tax, meaning higher earners pay a larger percentage of their income in taxes. The amount withheld from your paycheck depends on your gross income, filing status (Single, Married Filing Jointly, Head of Household), and any additional withholding you specify on your W-4 form. The calculator uses the 2024 federal tax brackets and standard deductions to estimate this amount.
New York State Income Tax
As a resident of New York, you are also subject to state income tax. Like federal tax, NYS income tax is progressive, with rates varying based on your income and filing status. The calculator applies the 2024 NYS tax brackets and standard deductions to determine your state tax liability.
New York City Income Tax
Living and working in NYC means an additional layer of taxation: the New York City resident income tax. This tax is also progressive and is applied to your income after certain deductions. The calculator incorporates the 2024 NYC resident tax rates based on your filing status.
Post-tax Deductions
Post-tax deductions are taken from your pay after all applicable taxes have been calculated and withheld. These deductions do not reduce your taxable income. Examples include:
Roth 401(k) contributions: Retirement savings that are taxed now but tax-free in retirement.
Union dues: Fees paid to a labor union.
Garnishments: Court-ordered deductions for debts like child support or student loans.
Charitable contributions: Deductions to charities directly from your paycheck.
The calculator allows you to input your total annual post-tax deductions, which are then prorated per pay period.
Net Pay
Your net pay, or "take-home pay," is the amount you receive after all federal, state, and city taxes, FICA contributions, and pre- and post-tax deductions have been subtracted from your gross pay. This is the final amount that gets deposited into your bank account or issued as a check.
By using the NYC Paycheck Calculator, you can get a clear estimate of your take-home pay and better understand the various deductions that impact your earnings.