Unexpectedly Intriguing!
January 2, 2020

Welcome to 2020! This new year brings with it one of the biggest changes to how Uncle Sam will go about taking money out of each of your paychecks during the year since federal withholding taxes first went into effect during the middle of World War 2 on 1 July 1943.

Here Is How New Income Tax Works - Source: Washington Evening Star, 3 June 1943 - https://chroniclingamerica.loc.gov/lccn/sn83045462/1943-06-03/ed-1/seq-4/

But you won't see the biggest change until you file a new IRS Form W-4 with your employer, which is when any withholding allowances you might have previously indicated on your W-4 forms from previous years goes away in favor of a single, much larger standard withholding allowance.

That change was made possible by the reforms of the Tax Cuts and Jobs Act of 2017 that is only now going to affect your paycheck because the IRS was busy redesigning its Form W-4 employee withholding certificate. The form has been revamped to simplify it, while also making it more useful for Americans who are effectively running their own single-person small business who earn income from their clients as independent contractors, and also for those who live in households that are earning incomes from multiple employers.

Other changes from that law, such as reduced personal income tax rates, have been in effect since 2018, so the main change there are the annual inflation adjustments for setting the income thresholds that might apply for your income tax bracket.

These are pretty big changes, but what if other things are changing for you? Is this the year that you'll crank up how much money you might invest in a pre-tax 401(k) retirement account at work? Does your employer offer health or dependent care pre-tax flexible spending accounts that you might take advantage of this year? What if you get a raise?

The answer to any one of these questions could have a big impact on how much money the U.S. government will let you take home from what you earned on the job.

Fortunately, our tool below is designed to help answer those questions! If you're reading this article on a site that republishes our RSS news feed, please click through to our site to access a working version. Otherwise, just start entering whatever numbers you want to consider for what your paychecks might look like in 2020....

Your Paycheck and Tax Withholding Data
Category Input Data Values
Basic Pay Data Current Annual Pay
Pay Period
Federal Withholding Data Filing Status
Have you filed a new IRS Form W-4 with your employer during 2020?
Number of Withholding Allowances (from your pre-2020 IRS Form W-4 if you haven't)
Extra Tax to Withhold per Paycheck (as requested on your IRS Form W-4)
401(k) or 403(b) Contributions Pre-Tax Contributions (%)
After Tax Contributions (%)
Flexible Spending Account Annual Contribution Data Health Care Spending Account
Dependent Care Spending Account
What if You Had a Raise? Desired Raise (%)















Your "Typical" Paycheck Data
Category Calculated Results Values
Basic Income Data Proposed Annual Salary (Including Raise!)
Typical Paycheck Amount
Federal Tax Withholding Amounts U.S. Federal Income Taxes
U.S. Social Security Taxes
U.S. Medicare Taxes
U.S. Additional "Medicare" Taxes (If Applicable)
401(k) or 403(b) Contributions Pre-Tax Contributions
After-Tax Contributions
Total Contributions
Flexible Spending Account Contributions Health Care Spending Account
Dependent Care Spending Account
Your Paycheck's Bottom Line
Take Home Pay Estimate Basic Net Paycheck Amount
... But, After Social Security's Taxable Income Cap Is Reached, It Becomes (If Applicable, for a Full Paycheck)
... And Then, After Additional Medicare Tax Income Threshold Is Reached, It Becomes (If Applicable, for a Full Paycheck)

Now that we've given you a sense of how much money you'll have withheld by the IRS in 2020 from each of your paychecks, we should note that there are some factors that can really complicate your withholding tax results depending upon how much you cumulatively earn during the year.

For example, in 2020, once you have earned over $137,700, you will no longer have the Social Security payroll tax of 6.2% of your income deducted from your paycheck (or 12.4% if you are self-employed, where our tool above is designed for those employed by others). But then, by the time that happens, you'll have long been paying taxes on your income that are taxed at rates that are at least 10% higher than those paid by over half of all Americans.

There's also the complication provided by the so-called "Additional Medicare Tax" that your employer is required to begin withholding from your paycheck if, and as soon as, your year-to-date income rises above the $200,000 mark, which is one of the new income taxes imposed by the "Affordable Care Act" (a.k.a. "Obamacare") that are still in effect. Since the money collected through this 0.9% surtax on your income does not go to directly support the Medicare program, unlike the real Medicare payroll taxes paid by you and your employer, it is really best thought of as an additional income tax. Since it has not ever been adjusted for inflation, that means that you could someday be subject to it through 1970s-style bracket creep, even though the tax was sold on the claim that it would be limited to very high income earners.

In the tool above, in case the amount of your annual 401(k) or 403(b) retirement savings contributions exceed the annual limits set by law, we've limited the results our tool provides to be those consistent with their statutory limits, and will do so as if you specifically set the percentage contributions for these contributions with that in mind. Our tool does not consider whether you might take advantage of the "catch-up" provisions in the law that are available to individuals Age 50 or older, which increase those annual contribution limits.

Elsewhere on the Web

There are other salary and hourly paycheck calculators like this on the Internet, including the very well done tools available at PaycheckCity.com. We really like PaycheckCity's Salary Paycheck Calculator because it allows you to determine the amount of state income tax withholding that will be taken out of your paycheck in addition to what the federal government takes out. Payroll processing giant ADP also has a salary paycheck calculator that will give you good results, but we still find the format of PaycheckCity's version to be more user friendly.

Then again, if you live in one of the seven states that have no personal income tax for wage and salary income (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming), our tool above will provide you with a very good estimate of your actual take-home pay.

Previously on Political Calculations

We've been in the business of calculating people's paychecks (not including state income tax withholding) since 2005!

Image Credit: Evening star. (Washington, D.C.), 03 June 1943. Chronicling America: Historic American Newspapers. Lib. of Congress.

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About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

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