How to calculate income tax per paycheck

6 October 2026 · Calcosmo editorial team

Payroll systems work out the tax on each paycheck by turning your pay into a yearly figure, calculating the annual tax, and dividing it back by the number of pay periods. On a Dutch salary of €48,000 a year, that comes to about €821 income tax per month in 2026. The same five steps work for any country; for the Netherlands you can run the numbers with the Dutch income tax calculator.

The five steps

1. Annualize your gross pay. Multiply the pay per paycheck by the number of pay periods: 52 (weekly), 26 (biweekly), 24 (semimonthly) or 12 (monthly).
2. Subtract pre-tax deductions and allowances. Pension or retirement plan contributions, and any tax-free allowance such as a personal allowance or standard deduction.
3. Apply the tax brackets to what is left. Each rate applies only to the slice of income inside its bracket.
4. Subtract tax credits. Credits reduce the tax itself, not the income.
5. Divide by the number of pay periods. That is the tax withheld per paycheck.

Withholding is an estimate. Bonuses, a second job, deductions or changes during the year can mean you pay more or get money back when the year is settled.

Why "brackets" don't tax all your income at the top rate

Moving into a higher bracket only affects the euros or pounds above the threshold. If the first €38,883 is taxed at 35.75% and the rest at 37.56%, a raise from €38,000 to €40,000 is taxed at the higher rate only on the €1,117 above the threshold.

Dutch example: €48,000 a year (2026)

The 35.75% rate in the first bracket includes national insurance contributions, so this is the full payroll tax ("loonheffing") for an employee, assuming 12 equal payments and that the employer applies the tax credits. In practice, the 8% holiday allowance paid in May is taxed separately at a "special rate".

UK example: £36,000 a year (2026/27)

For England, Wales and Northern Ireland, with tax code 1257L:

• personal allowance: £12,570 tax-free
• taxable income: £36,000 − £12,570 = £23,430
• income tax at 20%: £4,686 a year, or £390.50 a month
• employee National Insurance at 8% on earnings above £12,570: £1,874.40 a year, or £156.20 a month

Scotland has its own income tax bands and rates, so the income tax figure is different there.

United States

US federal withholding follows the same logic, using the information on your Form W-4 and the IRS tables in Publication 15-T. On top come Social Security and Medicare (FICA) and, in most states, state income tax. Because brackets and the standard deduction change every year, use the current IRS tables or your payroll provider's calculator for exact figures.

Common reasons your paycheck tax looks wrong

• Bonus months: the extra pay is often withheld at a flat or special rate, which can look high.
• Two jobs: each employer may apply your tax-free allowance or credits, leading to too little withheld.
• Starting mid-year: some systems assume you earn the same amount all year, so you may get a refund later.