The tax taken from your paycheck determines how much money goes in your personal account. Monthly income tax is the amount deducted from your monthly salary to fund federal and state services, social security services and Medicare. Calculating your monthly income tax determines how much money goes to these services.
Below are the steps to take to calculate monthly income tax.
- Determine your federal tax deduction. Federal tax deduction is a deductible from your paycheck that goes to federal programs such as education and state defense. You can calculate how much federal taxes take from your paycheck by taking down your gross pay and subtracting it by what you should subtract indicated in the Publication 15-T.
- Determine your state tax. Withheld state tax is in the W-4 form you filled out. This is the state tax that is deductible from your gross pay depending on your marital status and gross income. State tax is money allotted for state programs and local programs. State tax varies from state to state, while seven states in America do not charge state tax. These seven states are Alaska, South Dakota, Florida, Wyoming, Washington, Nevada and Florida.
- Get your social security tax. Your social security tax is your monthly gross salary deducted and multiplied by .062. The result is the withheld social security tax. Social security tax is tax charged by the government to fund the retired elderly and the disabled. Social security tax is also money allotment for children who are too young to work and whose parents passed away and received no finances.
- Determine your Medicare tax reduction. Medicare tax is health insurance for people 65 years and older. All Americans who are the ages of 65 and above are eligible for Medicare, but there are doctors and other medical services that Medicare does not cover .Your Medicare tax reduction is your monthly gross salary multiplied by .0145. The resulting number is the amount that Medicare charges in your income tax.
- Subtract all the amounts from your gross monthly salary. Subtract your federal, state, social security and Medicare tax from your gross monthly income. The resulting amount is your monthly income tax.
Calculating your monthly income tax by following the steps listed above will tell you what the state and the country deducts from your monthly income. You can calculate your income tax much easier if you calculate your monthly income tax every month and add them all together. In addition, you also learn how much your net pay is by calculating your monthly income tax. Your local state has varied deductibles and rules regarding monthly income tax. Knowing what these rules are will affect the values that used in the steps above. Calculating your monthly income tax is a tedious and head-spinning process. However, keeping track of your monthly income tax is a sure way of knowing how much money you have left in your paycheck. Knowing the amount left in your paycheck after monthly income tax deductibles will also help you budget expenses monthly and determine how much you can expect on your next paycheck.