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PayslipIQUSA

PayslipIQ — methodology & sources

How the calculators work, where each number comes from, what we cannot model, and how to read confidence ratings on PayslipIQ outputs.

Federal income tax withholding

PayslipIQ uses the IRS Pub. 15-T 2025 percentage method (Standard Withholding, Step 2 unchecked) by default. The user's annual gross is computed from the per-period gross multiplied by the appropriate periods (52 weekly, 26 biweekly, 24 semimonthly, 12 monthly). Annual deductions and other-income from the W-4 (Step 4a–4c) adjust the base. Bracket-by-bracket tax is computed against the IRS annual tables for the chosen filing status (Single / Head of Household / Married Jointly), then dependent credits (Step 3) are subtracted at $2,000 per child under 17 plus $500 per other dependent. Per-period extra withholding (Step 4c) is added to the per-paycheck result.

What we do not model in v1: the W-4 Step 2(c) checkbox "higher withholding" tables, the Multiple Jobs Worksheet computation, partial-year income (new hires mid-year), and employer use of wage-bracket lookup tables (which can produce small differences from the percentage method).

FICA — Social Security and Medicare

Social Security: 6.2% of FICA-taxable wages up to the 2025 SSA wage base of $176,100. PayslipIQ accepts a year-to-date wages input so it can stop withholding once the wage base is reached.

Medicare: 1.45% of all FICA-taxable wages. Additional Medicare Tax of 0.9% is applied on per-employee year-to-date wages above $200,000 (the employer withholding threshold). The user's actual Additional Medicare liability depends on filing status and joint income — this is a withholding model, not a final-tax model.

State income tax

For each of the 50 states plus the District of Columbia, PayslipIQ stores either: (a) a flag for "no income tax on wages," (b) a flat-rate model with optional state standard deduction, or (c) a progressive bracket model. Single-filer baseline rates published by the state revenue agency for 2025 are used. Married-Filing-Jointly and Head-of-Household variants and state-specific allowances are flagged as "estimated using a single-filer baseline" in every output. Where a state operates additional payroll levies (CA SDI, NJ SDI/FLI, NY PFL/SDI, WA PFML/Cares, MA PFML, CT PFML, OR Paid Leave / Statewide Transit, RI TDI/TCI, CO FAMLI), they are documented on the state hub and noted as items to expect on a stub.

Local / city income tax

For the 33 priority cities, PayslipIQ stores the local income-tax name and (where stable) the resident rate. NYC resident, Philadelphia, Detroit resident/non-resident, Cleveland and most Ohio cities (RITA / CCA), Cincinnati earnings tax, Pittsburgh EIT/LST, Kansas City and St. Louis 1% earnings tax, Indianapolis (Marion County), Denver Occupational Privilege Tax, Wilmington, Portland Multnomah / Metro / Statewide Transit, and Baltimore City local income tax are modelled. Resident vs non-resident and remote-work scenarios are flagged for verification.

Overtime

Federal FLSA: 1.5× the regular rate over 40 hours in a workweek for non-exempt employees. State daily-overtime rules are applied for California (1.5× over 8 hrs/day, 2× over 12 hrs/day or 8 hrs on the 7th consecutive workday), Colorado, Alaska, and Nevada. Exempt vs non-exempt classification is not assessed by PayslipIQ — DOL Fact Sheet #17A is the definitive reference.

Bonuses and supplemental wages

PayslipIQ models the IRS flat method per Pub. 15: 22% federal withholding on supplemental wages, escalating to 37% on cumulative annual supplemental wages above $1,000,000. The aggregate method is documented but not applied automatically. The model adds FICA and a state estimate at the supplemental rate. Every output reminds the user that the withholding rate is not the final tax rate.

Pre-tax vs post-tax interaction

Traditional 401(k) reduces federal taxable wages and most state taxable wages but not FICA. Roth 401(k) does not reduce taxable wages. HSA and FSA contributions made through payroll reduce federal taxable wages, FICA, and most state taxable wages. Section 125 health/dental/vision premiums reduce federal taxable wages and FICA, and reduce state taxable wages everywhere except Pennsylvania. These rules are baked into the calcPaycheck engine.

Confidence wording

Every numeric output uses one of three confidence labels:

  • Educational estimate. The calculation matches the published method but cannot reflect employer-specific payroll settings, multi-job W-4 configurations, mid-year W-4 changes, or state allowances PayslipIQ does not model.
  • Source-cited. The figure cites a specific IRS, SSA, DOL, or state agency rule, with the tax year and last-verified date.
  • Manual review required. The figure is incomplete or depends on an input PayslipIQ cannot infer — the user is told what to verify.

Federal source register

State source register

For each state and DC, PayslipIQ tracks the state revenue agency (where one exists) and the state labor agency. The full list is maintained in the codebase at /countries/us/sources.ts and surfaced on every state hub page.

Show all 51 state source links

Update cadence

The federal source register is reviewed every quarter. The state source register is reviewed at least annually and again when a state announces a rate change. New tax-year tables are integrated within 30 days of IRS publication.

Known limitations

  • Single-filer state baseline only — Married/HoH and state allowances change actual withholding.
  • No multi-job / dual-spouse withholding modelling.
  • No partial-year hire modelling.
  • No imputed income (group-term life over $50k, personal use of company car).
  • No reciprocity-agreement handling for cross-state workers.
  • City rates limited to the 33 priority cities.

If you spot a number that disagrees with the source we cite, please contact us and we will reconcile.