How a Texas paycheck works
Texas is one of the states without a personal income tax; its constitution forbids the legislature from imposing one. A Texas employee therefore has only federal deductions: income tax withheld according to Form W-4, and the two FICA contributions, Social Security and Medicare. The employer matches Social Security and Medicare, pays federal unemployment tax on a small wage base, and pays Texas unemployment insurance at a rate that depends on its own history, which is why that levy is not shown here. The state funds itself mainly through sales tax and, at the local level, property tax, neither of which is a payroll item.
Federal income tax withholding
The employer takes the annual wage, subtracts the standard deduction for the filing status chosen in Step 1 of Form W-4, applies the progressive rate schedule for that status, and reduces the result by any dependent credits entered in Step 3. The calculator reproduces that annual computation for a W-4 with nothing entered in Steps 2 and 4: one job, no spouse income, no other income and no extra withholding. Single and married filing separately share one schedule; married filing jointly and head of household have their own.
The child tax credit entered in Step 3 applies in full below the statutory income limit for the filing status. Above it, the credit shrinks by a fixed amount for every thousand dollars of excess, and the calculator applies that reduction so that the estimate changes smoothly rather than jumping at the limit.
Social Security and Medicare
Social Security is withheld at a flat rate up to the annual wage base, which is indexed to national wage growth each year; wages above it are exempt, which is why the effective rate of a high salary flattens. Medicare has no wage base. Once wages in the calendar year pass a fixed threshold, the employer must also withhold the Additional Medicare tax on the excess regardless of the employee’s filing status. The employer matches the Social Security and regular Medicare contributions but not the additional tax.
What the employer pays on top
The employer section shows the matching Social Security and Medicare contributions and the federal unemployment tax at its usual net rate after the credit for state unemployment tax. Texas unemployment insurance is charged on a small wage base at a rate assigned to each employer, so it varies from company to company and is left out. Workers’ compensation insurance is optional for most private employers in Texas and is not a payroll deduction.
What this calculator assumes
The result models a regular employee paid evenly through the year with a standard Form W-4 and no pre-tax deductions. It does not cover:
- Pre-tax contributions to a 401(k), health premiums or flexible spending accounts, which reduce the wages subject to income tax and sometimes to FICA.
- Extra withholding requested on the W-4, or the adjustments in Steps 2 and 4 for a second job, a working spouse or other income.
- Bonuses and other supplemental wages, which are withheld at a flat supplemental rate.
- Employer-side Texas unemployment insurance and any federal unemployment credit reduction.
- Employees exempt from Social Security, such as some public employees and certain visa holders.
Withholding versus your final tax bill
Withholding is a prepayment. On the federal return the standard computation is replaced by your actual situation: itemized deductions if they are larger, other income, and credits such as the earned income credit or education credits. Most single-job employees receive a refund; people with two jobs, investment income or a working spouse often owe. Use this page to plan a monthly budget, and a full return estimate to plan the year.