Payroll deduction analyzer
Contributing pretax money to your company’s retirement plan offers you several benefits, including tax-deferred growth potential and reduced current income taxes.
Your contributions to your retirement plan, changes to your filing status and the number of allowances you claim all affect your take-home pay. Use this calculator to see how changing your pretax retirement plan contributions could affect your paycheck. This calculator does not take state and local taxes into account; the results are only an estimate. Your paycheck contains much of the information that is required by this analyzer.
- Pay period
- How frequently you get paid.
- Filing status
- Your income tax filing status. Select “Married” if you are married or filing as the head of household. Select “Single” if you are single, or married but filing separately.
- Gross pay per period
- The amount of pay you receive per pay period before any deductions.
- Number of allowances
- You may claim allowances to reduce the amount of federal income tax withheld from your paycheck. Each allowance you claim is equal to $4,200 of income that you expect to have in deductions when you file your annual tax return. The number of allowances you claim is based on the number of dependents you have and on your itemized deductions.
- Pretax deductions
- Payments that are automatically deducted from your pretax income for certain employer-sponsored benefits (other than retirement plans). These might include health care reimbursements, for example.
- Post-tax deductions
- Payments that are automatically deducted from your after-tax income for certain employer-sponsored benefits. These might include life insurance or employer stock purchases, for example.
- Post-tax reimbursements
- Reimbursements made by your employer after taxes have been taken out, such as business expense reimbursements.
- Salary deferral contribution to retirement plan
- The percentage of your pretax pay that you contribute into a retirement account, such as a 401(k) or 403(b). While making pretax retirement plan contributions does lower your take-home pay, it also lowers your current federal income taxes. The amount you contribute toward your retirement plan will be greater than the reduction in your paycheck. The maximum salary deferral contribution to a 401(k) or 403(b) plan in 2019 is $19,000, or $25,000 for individuals age 50 and older. This calculator allows you to deduct up to 80% of your pay, but you should check with your plan sponsor about your plan’s provisions.
- Federal tax withholding calculations
Federal income tax withholdings are calculated by:
- Multiplying gross pay by the number of pay periods per year to compute your annual salary.
- Subtracting the value of allowances allowed (for 2019, this is $4,200 multiplied by the number of withholding allowances claimed).
- Determining your annual tax by using the single or married rate tables below.
- Dividing the amount of tax by the number of pay periods per year to arrive at the amount of federal withholding tax to be deducted per pay period.
Single withholding rates for 2019* Annual taxable income between these amounts Annual withholding Withhold additional % of income over this amount $0–$3,800 $0.00 0% $0 $3,800–$13,500 $0.00 10% $3,800 $13,501–$43,275 $970.00 12% $13,500 $43,276–$88,000 $4,543.00 22% $43,275 $88,001–$164,525 $14,382.50 24% $88,000 $164,526–$207,900 $32,748.50 32% $164,525 $207,901–$514,100 $46,628.50 35% $207,900 $514,101 and over $153,798.50 37% $514,100
*Subject to change by the IRS
Married withholding rates for 2019* Annual taxable income between these amounts Annual withholding Withhold additional % of income over this amount $0–$11,800 $0.00 0% $0 $11,801–$31,200 $0.00 10% $11,800 $31,201–$90,750 $1,940.00 12% $31,200 $90,751–$180,200 $9,086.00 22% $90,750 $180,201–$333,250 $28,765.00 24% $180,200 $333,251–$420,000 $65,497.00 32% $333,250 $420,001–$624,150 $93,257.00 35% $420,000 $624,151 and over $164,709.50 37% $624,150
*Subject to change by the IRS
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional or downloaded and should be read carefully before investing.
This calculator was developed by KJE Computer Solutions, which is not affiliated with American Funds. It is intended for use in comparing changes to your salary deferral plan contribution. We do not guarantee the accuracy of the results or their relevance to your particular circumstances. We encourage you to seek the assistance of your financial professional.
Copyright 2021 American Funds Distributors, Inc.