Methodology & Tax Engine

How the estimate is computed

1. Annualise. Salary or hourly inputs are converted to annual gross pay for the tax year.
2. Pre-tax deductions. Traditional 401(k) deferrals reduce the federal income-tax base but stay subject to FICA. Pennsylvania keeps employee 401(k) contributions in its state tax base; other plan types are not modeled. Eligible payroll §125 items such as health premiums and HSA contributions reduce the modeled federal and FICA bases.
3. Federal income tax. Taxable income = annual gross − pre-tax deductions − the 2026 standard deduction for the selected filing status, taxed through the marginal brackets. The take-home calculator applies the modeled Child Tax Credit when qualifying children are entered, limited to federal tax due. Itemised deductions, refundable credit amounts and other credits are not modeled. The 1099 comparison separately applies its limited QBI model.
4. FICA. Social Security at the employee rate up to the $184,500 wage base; Medicare on all wages; Additional Medicare withheld above the flat $200,000 employer withholding threshold regardless of filing status.
5. State income tax. State taxable income = gross − modeled state-eligible deductions − the state standard deduction − dollar-value personal exemptions where used, taxed through that state's brackets or flat rate. Pennsylvania's 401(k) exception is retained. 9 of the 51 jurisdictions have no wage income tax; that does not exclude other payroll or local taxes.
6. Spread across pay periods. The annual liability is divided evenly by the number of pay periods.

Attributing a change between two paychecks. The paycheck change calculator explains a difference without introducing any new arithmetic: it starts from the earlier scenario, changes one input at a time in a fixed, published order — gross pay, pay frequency, filing status, state, 401(k) percentage, pre-tax §125 — and re-runs the steps above after each change, recording the difference that step produced. Because the steps chain into one another they land exactly on the later scenario, so the individual amounts add up to the whole change and the unexplained residual is zero; a test fails the build if it is not. The order is fixed because interacting changes (a raise that also reaches the Social Security wage base, for example) put the interaction on whichever cause is applied later, and a published order makes the same pair of paychecks always produce the same breakdown. Thresholds the engine crossed are reported separately rather than folded into a cause.

Withholding vs. estimated annual liability

Two different questions have two different answers, and the site computes both with separate engines that never share arithmetic:

• Withholding is what your employer takes out of one paycheck. It follows IRS Publication 15-T, Worksheet 1A and the annual percentage-method tables for Forms W-4 filed in 2020 or later: the taxable wages in the period are annualised, adjusted by your W-4 Step 4 entries, looked up in the table your Step 1(c) status and Step 2 checkbox select, divided by the number of pay periods, then reduced by the Step 3 credit per period and increased by any Step 4(c) extra. It is driven entirely by the form you gave payroll, and it is figured on federal income-taxable wages — gross pay minus pre-tax amounts such as a traditional 401(k) deferral and §125 premiums — never on gross pay.
• Estimated annual liability is what the year's wages are estimated to cost in federal income tax: the same wages for the whole year, less the 2026 standard deduction, through the federal brackets. The calculators divide it evenly across pay periods, which is a planning convention, not a payroll method.

The gap between the two is the refund or the bill. Annualised withholding minus estimated liability: positive means more was withheld than the estimate says is owed, which arrives as a refund; negative means less was withheld, which arrives as a payment. The W-4 withholding calculator shows both figures and that gap side by side, with the Worksheet 1A lines behind them. Both sides cover federal income tax only — Social Security, Medicare and state income tax are withheld under their own rules — and the liability side models the standard deduction with no credits, so W-4 entries describing credits, other income or itemised deductions widen the gap shown there. Results are estimates for planning, not payroll output and not tax advice.

Compound savings growth

The savings growth calculator is arithmetic, not a tax computation: it takes a starting balance P, a contribution C repeated every period, p contribution periods a year, a nominal annual rate r compounded m times a year and n = p × years periods elapsed. The rate over one contribution period is

i = (1 + r/m)^(m/p) − 1

so that (1 + i)^p = (1 + r/m)^m, and the balance after n periods is

B = P(1 + i)^n + C((1 + i)^n − 1)/i, and B = P + Cn when i = 0.

The second form is the exact limit of the first as i approaches zero and is evaluated directly, so a rate of zero produces a straight line and nothing is ever divided by zero. Contributions are counted at the end of each period — an ordinary annuity — so a deposit earns nothing during the period it was made in. Saving at the start of each period would produce one period's extra growth on every deposit, which makes the published figure the conservative one. Pay cadence is taken literally: biweekly pay is 26 deposits a year, not 24. Inflation, where entered, only restates the ending balance in today's money as B / (1 + f)^years; it does not reduce the growth. The "rule of 72" shown beside the result is labelled an approximation because it is one — the exact doubling time is ln 2 / ln(1 + r), and both are displayed.

The rate is always supplied by the user, and the site never suggests one. The rate-of-return field ships empty with a neutral placeholder; there is no default, no preset, no "typical" figure and no historical average anywhere in the page, the module or the server-rendered default scenario, and the compute function has no rate to fall back on. This is deliberate and permanent. Arithmetic performed on assumptions a reader chose is a hypothetical illustration of a mathematical principle; the same arithmetic performed on a rate we chose would be a claim about how an investment will perform. PaycheckForge is not a registered investment adviser or a broker-dealer, and nothing on that page is investment advice.

Not modelled: tax on interest, dividends or capital gains; account, platform or fund fees; inflation on the investment itself; sequence of returns — a single constant rate is applied to every period, so a run of poor years early and the same average arriving late produce the identical figure here and would not in reality; withdrawals; and contributions that rise with a raise. Any paycheck figure the page shows comes from the take-home engine described above, and that page introduces no tax parameter of its own.

Engine version & changelog

The engine version follows <tax year>.<minor>.<patch>. A minor bump means a figure or formula changed; a patch bump means wording or metadata only. The current version is 2026.2.1 and is printed inside the rule pack.

Open data: the 2026 rule pack

Download /rules-2026.json

The rule pack is generated at build time directly from the engine source files (federal2026.ts, states2026.ts, taxData.ts). It contains the federal brackets and standard deductions per filing status, FICA and Additional Medicare parameters, employer FICA and FUTA, and — for all 51 jurisdictions — the bracket structure or flat rate, standard deduction, exemptions and modelling notes, plus the sources, limitations and changelog above. Rates are decimals; the open-ended top bracket has "upTo": null.

It is released under the Creative Commons Attribution 4.0 International (CC BY 4.0) licence. You may copy, redistribute and adapt it, including commercially, provided you give appropriate credit. Suggested attribution:

PaycheckForge 2026 Tax Rule Pack (engine 2026.2.1), https://paycheckforge.com/rules-2026.json, licensed under CC BY 4.0 for PaycheckForge's own original work only (see /terms/ §6). Underlying IRS and SSA figures retain their own source terms.

Underlying IRS, SSA and Tax Foundation figures retain their own source terms. Also available for assistants and crawlers: /llms.txt.