How to Calculate Monthly Income Tax
Everyone should know how to calculate monthly income tax as it gives you an idea about what will be your salary after paying federal, state, social security, and many other forms of deductions.
You should know how to do this with or without taking the pre-tax deductions under consideration. If you are not familiar with the pre-tax deduction, there is no need to worry. They apply only to a few specific domains such as federal taxes, and secondly, even without calculating the pre-tax deductions you can get a fairly accurately estimate of your monthly income.
Instructions
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1
Arrange a calculator and few sheets of paper before moving forward. Calculate your federal tax deduction for the entire year. For that, you will need to know your total gross annual salary. If you are not sure about the exact figure, you can always demand an annual basic salary slip from your firm.
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2
Divide the figure by 12, this is your gross monthly salary. Use the tax table to calculate salary tax for your pay grade. Read the table under the W-4 column to find out the allowance you claimed, and calculate your tax. For example if your monthly income is $ 2500 with the permission to draw allowance for one person, your total federal tax shall be $ 264. Getting hold of a table will make this quite clear.
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Now calculate your state tax by using the same figure of your total monthly pay and putting it in the tax table for your state. These tables vary from state to state, all you have to do is to put in the numbers and the sheet will calculate your state tax automatically for you.
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To measure the tax deducted by the social security department, take your monthly gross salary and multiply it with .062 to get the exact amount.
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Medicare deduction is also fixed and does not have different tax slabs. The product of your monthly tax with .0145 is your medicare monthly tax
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Now to calculate your monthly income, subtract all the above calculated amounts from your gross monthly salary.
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To calculate the taxes after pre-tax deductions, you can calculate the monthly income tax by subtracting the amount of money you give away to other programs such as 401k program.
For example, if you contribute an amount of 500 dollars a month to any such program, you should subtract 500 from your monthly salary, and then apply the formula for calculation of taxes.
