USA Payroll Calculator (Hourly Paycheck Calculator by State)

FICA (Federal Insurance Contributions Act) covers Social Security and Medicare taxes — two federal payroll taxes that apply in every state regardless of local income tax rates. As of the current federal rates: Social Security is 6.2% on wages up to the annual wage base (verify the current wage base — it adjusts annually, typically around $160,000–$168,600). Medicare is 1.45% on all wages with no cap. An additional 0.9% Medicare surtax applies to wages over $200,000 for single filers ($250,000 for married filing jointly) — withheld by the employer once wages pass $200,000. Employers match both the Social Security and Medicare portions, paying an equal amount themselves on top of what they withhold from employees.

Nine US states have no state income tax on wages: Alaska, Florida, Nevada, New Hampshire (no tax on wages — historically taxed only interest/dividends, now eliminated), South Dakota, Tennessee (fully eliminated in 2021), Texas, Washington State, and Wyoming. These states simplify payroll calculations because employers withhold only federal taxes. However, some of these states have other payroll-related obligations — Washington State's Paid Family and Medical Leave (PFML) and Long-Term Care Insurance contributions are significant examples — so "no income tax" does not mean "no state payroll obligations."

A tax reciprocity agreement between two states allows residents of one state who work in the other to pay income tax only in their home state — not in the state where they work. Without reciprocity, an employee who lives in State A but works in State B would technically owe income tax to both states (though they would typically get a credit on their home state return for taxes paid to the work state). With reciprocity, the employer withholds only for the employee's home state. To claim the exemption, employees typically complete a specific exemption form from the work state (e.g., Virginia Form VA-4 with "exempt" status). Always verify which form is required for your specific state pair before stopping withholding for the work state.

SUTA (State Unemployment Tax Act) taxes apply in every state — this is the state component of unemployment insurance. Unlike FICA taxes which split between employer and employee, SUTA is typically an employer-only tax (though a few states — Alaska, New Jersey, and Pennsylvania — also have an employee SUTA contribution). The SUTA rate and wage base vary significantly by state and by employer — new employers typically start at a standard rate and then receive an experience rate based on their unemployment claims history. SUTA rates range from under 0.1% to over 10% depending on the state and the employer's claims history. All employers should verify their state-specific SUTA rate with their state's unemployment insurance agency.

Gross pay is the total compensation an employee earns before any deductions — the agreed hourly rate multiplied by hours worked, or the fixed salary amount per pay period. Net pay (take-home pay) is what the employee actually receives after all deductions: federal income tax withholding, state income tax withholding (if applicable), FICA (Social Security 6.2% + Medicare 1.45%), any local income taxes, pre-tax benefit deductions (health insurance premiums, 401(k) contributions, FSA/HSA contributions), and any post-tax deductions (Roth 401(k), voluntary benefits, garnishments). The difference between gross and net can be substantial — an employee earning $5,000/month gross might take home $3,400–$3,700 depending on their filing status, deductions, and state of residence.

For most small and medium businesses, a dedicated payroll software or service is strongly recommended over manual payroll processing. The main reasons: payroll tax compliance is extremely complex and the penalties for errors, late filings, or missed deposits are significant; tax rates, forms, and requirements change frequently; and the time cost of manual payroll — particularly as headcount grows — is substantial. Gusto is the most recommended option for SMBs: it handles automatic tax filings in all 50 states, W-2 and 1099 generation, direct deposit, benefits administration, and compliance monitoring. QuickBooks Payroll is the best option for businesses already using QuickBooks for accounting. Deel is the right choice for companies with international employees or contractors. Any of these options significantly reduces the compliance burden and risk compared to manual calculation and filing.