Methodology

Last updated: April 2026 · Tax year: 2026

This page documents the formulas and assumptions behind every SalaryLabs calculator. The math runs in your browser, and the result is an estimate based on the inputs and limits described below.

1. Salary Conversions

All time-period conversions use the following defaults (adjustable in each tool):

• Annual → Hourly: Annual ÷ (hours/week × weeks/year). Default: 2,080 hours (40 hrs × 52 wks)
• Annual → Monthly: Annual ÷ 12
• Annual → Biweekly: Annual ÷ 26
• Annual → Weekly: Annual ÷ 52
• Annual → Daily: Annual ÷ (weeks/year × days/week). Default 5-day work week.
• Hourly → Annual: Hourly × hours/week × weeks/year

2. Federal Income Tax (2026)

Federal income tax uses the IRS progressive bracket system (Rev. Proc. 2025-32):

1. Subtract the standard deduction from gross income to get taxable income.
2. Apply each marginal rate only to the income within that bracket.
3. Sum all bracket amounts for total federal tax.

2026 Standard Deductions: Single $16,100 · Married Filing Jointly $32,200 · Head of Household $24,150 · Married Filing Separately $16,100

We model the standard deduction only. Itemized deductions, many above-the-line adjustments, and tax credits are outside scope, so actual liability can differ.

3. FICA Taxes (2026)

FICA is applied to gross wages (before the standard deduction):

• Social Security: 6.2% on wages up to $184,500 (2026 SSA wage base). Withholding stops once this threshold is reached for the year.
• Medicare: 1.45% on all wages, no cap.
• Additional Medicare Surtax: 0.9% on wages above $200,000 (single) / $250,000 (MFJ). Employer withholds once wages exceed $200,000 regardless of filing status; final liability is settled at tax filing.

Source: SSA Contribution Base · IRS Topic 751

4. State Income Tax

State tax estimates use a simplified model derived from each state's published rate schedules. We apply the marginal rate relevant to the entered income level. This model:

• Does not capture state-specific standard deductions, exemptions, credits, or alternative minimum taxes.
• Does not model local city income taxes (e.g., New York City, Philadelphia).
• Works as a directional estimate for most workers, but will differ from a filing-grade state tax result.

Nine states have no income tax (AK, FL, NV, NH, SD, TN, TX, WA, WY) — our calculators reflect $0 state tax for these states.

5. Overtime Pay

Overtime calculations follow FLSA Section 7 (federal law):

• Regular rate: Input hourly rate (or annual ÷ 2,080)
• Time-and-a-half: Regular rate × 1.5, applied to hours 41–60 above standard 40-hour week
• Double time: Regular rate × 2.0, applied to hours above 60 (where applicable by state law)

Some states are more generous than the federal baseline. Our calculator starts with FLSA rules unless the page states otherwise.

6. Income Percentile

Income percentile rankings use BLS Occupational Employment and Wage Statistics (OEWS) data — specifically the national wage distribution tables across all occupations. The percentile shown is the position of the entered income within the published distribution. BLS OEWS tables are updated when the latest public release is available.

7. Salary Inflation Adjustment (Salary Time Machine)

Inflation adjustments use BLS CPI-U annual averages from 1970 through the most recent available year. Future projections use the latest 12-month CPI-U trend and should be treated as estimates, not forecasts you can rely on precisely.

8. Purchasing Power by State (Salary Heatmap)

State purchasing power adjustments use Bureau of Economic Analysis Regional Price Parity (RPP) indices. An RPP of 90 means goods and services cost approximately 10% less than the national average — so a $100,000 salary has the purchasing power of ~$111,000 in national terms.

9. What These Calculators Do Not Model

• Most 401(k), 403(b), IRA, or HSA contribution effects on tax liability (the Take Home Pay tool includes only a basic 401(k) approximation)
• Employer benefit costs (health insurance premiums, FSA)
• Self-employment tax for independent contractors
• Child Tax Credit, Earned Income Tax Credit, or other refundable credits
• Alternative Minimum Tax (AMT)
• State-specific itemized deductions