Payroll calculation methodology

We start from the pay type you select (hourly or salary), hours or period salary, overtime and other earnings you enter, and any supplemental amounts included in the run. Year-to-date (YTD) fields, when provided, keep Social Security wage-base and similar limits consistent across stubs.

Pre-tax items you enter (for example retirement or certain benefit deductions) reduce taxable wages for federal income tax and, where applicable, for FICA or state tax according to the deduction type selected on the form.

Federal withholding follows IRS Publication 15-T style percentage-method logic for the selected Form W-4 setup (filing status, step 2 checkbox, dependents amount, other income, deductions, and extra withholding). Supplemental wages may use the IRS flat supplemental rate when that path applies.

Primary reference: IRS Publication 15-T.

Employee Social Security and Medicare are calculated from FICA taxable wages using the current tax-year rates and the Social Security wage base. Additional Medicare Tax may apply above the IRS threshold when YTD wages support that calculation.

Primary references: IRS Publication 15, SSA contribution and benefit base.

When a work state is selected, we load that jurisdiction’s withholding inputs and apply state income-tax rules maintained for the tax year. States with no wage income tax show $0 state FIT. Statutory state deductions (for example California SDI) appear when they apply to the selected state and pay period.

See official sources and each state payroll guide for labor-department links.

Net pay equals gross earnings minus employee taxes and the deductions you configured. The live preview is the same calculation path used for the downloadable PDF after checkout, so what you review is what you buy.