How to Calculate Monthly Income Tax

Get out a pencil and calculator to determine your monthly income tax.

You can learn how to calculate monthly income tax and see what your net pay will be after your federal, state, Social Security and Medicare deductions are subtracted. You can do this with or without pretax deductions. Federal and state taxes are the only items affected by pretax deductions. Social Security and Medicare are calculated on the gross without any pretax deductions.

Things You'll Need

• Gross pay
• Pretax deductions
• Number of allowances from W-4
• Publication 15-T
• State withholding table

Instructions

Without Pretax Deductions

1. Calculate your federal tax deduction by taking your gross pay and using the tax table in Publication 15-T (see Resources) to see how much you should subtract. Go to the page with single person's monthly payroll or married person's monthly payroll depending on your marital status. Then look for your total gross income on the tax table. Look under the column for the number of W-4 allowances you claimed on your W-4 to find your tax. For example, $2,500 (monthly gross) with one allowance for a single person would be $226 federal tax withheld.

2. Calculate your state tax by taking your gross pay and using the table on State Withholding by State (see Resources). Example: $2,500 (monthly gross) with one allowance for a single person would be $136.42 state tax withheld.

3. Calculate your Social Security tax deduction by taking the gross amount and multiplying it by 6.2 percent (.062). Example: $2,500 x .062 = $155 withheld from your monthly gross for Social Security.

4. Calculate your Medicare tax deduction by taking the gross amount and multiplying it by 1.45 percent (.0145). Example: $2,500 x .0145 = $36.25 withheld from your monthly gross for Medicare.

5. Calculate your gross monthly income tax to find your net pay. Example: $2,500 -- $36.25 (Medicare) -- $155 (Social Security) -- $136.42 (state) -- $226 (federal) = $1,946.33.

With Pretax Deductions

1. Figure out your federal tax when you have a pretax deduction by subtracting items such as your 401k contribution from your monthly gross income. Then use the amount left over to find your federal tax from Publication 15-T (see Resources). For instance, if you contribute $100 a month to a 401k, you would subtract the $100 from your gross income. For example, $2,500 (gross income) -- $100 (401k) = $2,400, which is the amount you will use to find your federal tax.

2. Calculate your tax by using the federal gross after the pretax deduction. The amount for this example is $2,400. You are single with one allowance so your state tax is $129.14 when using the tax rate from your state found at State Withholdings by State (see Resources).

3. Calculate your Social Security tax deduction by taking the gross amount and multiplying it by 6.2 percent (.062). Example: $2,500 x .062 = $155.00 withheld from your monthly gross for Social Security.

4. Calculate your Medicare tax deduction by taking the gross amount and multiplying it by 1.45 percent (.0145). Example: $2,500 x .0145 = $36.25 withheld from your monthly gross for Medicare.

5. Calculate you gross monthly income tax to find your net pay. Example: $2,500 -- $100 (pre-tax deduction) -- $36.25 (Medicare) -- $155 (Social Security) -- $129.14 (state) -- $211 (federal) = $1,868.61.

Resources

• Publication 15-T
• State Withholding by State