How to Calculate Tax on a Weekly Salary

How to Calculate Tax on a Weekly Salary
••• A young woman holding a pen, doing her taxes image by Christopher Meder from Fotolia.com

Knowing if you’ll be getting a tax refund at the end of the year or if you’ll owe money can help you plan your personal finances in a number of ways. Depending on how much you make and what deductions come out of your paycheck each period, your taxes will vary.

Knowing how to calculate your taxes when you’re paid a salary and receive your payments weekly will help you plan ahead and be able to manage your money more wisely.

Consider Your Deductions

You provide your employer with information on deductions and adjustments that affect how much in taxes they take from your paycheck. You do this on Form W-4 where you provide details about yourself, your spouse and your dependents. Ultimately, this information can affect how much income tax you’ll pay each year.

Find Your Tax Bracket

Depending on your salary, you fall into a specific tax bracket. These brackets set the percentage of your gross income that you’ll pay each year. You can view the 2021 tax brackets here, and easily find updated numbers each year going forward with a quick online search.

Understand How FICA Works

Each week, you’ll have Social Security and Medicare taxes (FICA) deducted from your paycheck. You will pay 7.65 percent of your gross pay to cover this amount. If you earn ​$1,000​ per week in gross pay, you’ll pay ​$1,000​ X .765, or ​$76.50​ per week toward FICA.

Find Your State Tax Rate

If you live in a state with a personal income tax, you’ll need to factor that into your calculations. Talk to your company’s payroll people or contact a personal financial planner or tax accountant to determine how much tax you’ll pay each week to cover your state income taxes. You can find your state’s tax rates online with a quick search.

Look At Your Benefits

If you have opted for specific benefits such as health, dental or vision insurance or a retirement account contribution, you reduce your tax burden. That’s because those benefits are tax-deductible. If you have ​$100​ worth of benefits deducted from your pay each week, you aren’t taxed on that ​$100​ worth of income.

Talk to your company’s bookkeeper or your HR department benefits specialist to find out how your benefits affect your taxes.

Do the Calculation

It might be easiest to calculate your total annual taxes once, then divide this number by 52 to figure out your weekly tax burden. Or, once you have all your numbers (exemptions, deductions, FICA, federal tax rate, state tax rate) figured out, you can divide your salary by 52 and figure out your taxes for one week.

Your calculation will deduct your federal income tax deduction (using the number you determined from looking at your tax bracket) and your 7.65 percent FICA deduction (.0765), along with your state income tax number. If you believe you know what your bonus, commission or other non-salary payments will be, factor those into your annual tax calculations. You might have to re-do your tax bracket numbers based on whether or not you fall into a new tax bracket.

Use a Tax Calculator

For a quick start estimating your weekly taxes, try an online income tax calculator, like the one provided by payroll services provider ADP. Some calculators let you put your information in, selecting your salary, state where you live and exemptions. The IRS provides a tax withholding estimator, as well.