Understanding Your Paycheck: Current Tax Guide
Decoding marginal tax rates, deductions, and take-home pay for the USA and Canada.
Gross vs. Net Pay
Your Gross Pay is the total amount of money you earn before any deductions are made. Your Net Pay (or take-home pay) is what actually hits your bank account after federal taxes, regional taxes, and social contributions are removed.
USA: Federal Income Tax Brackets (Current)
The US uses a progressive tax system. This means you only pay higher rates on the portion of your income that falls into higher brackets.
| Rate | Taxable Income (Single Filers) |
|---|---|
| 10% | $0 – $11,925 |
| 12% | $11,925 – $48,475 |
| 22% | $48,475 – $103,350 |
| 24% | $103,350 – $197,300 |
| 32% | $197,300 – $250,525 |
| 35% | $250,525 – $626,350 |
| 37% | $626,350 or more |
Mandatory Payroll Taxes (FICA)
- Social Security: 6.2% (capped at $176,100 of earnings).
- Medicare: 1.45% (no cap).
Canada: Federal Income Tax Brackets (Current)
Similar to the US, Canada's federal tax system is progressive. Residents also pay provincial or territorial taxes on top of these rates.
| Rate | Taxable Income |
|---|---|
| 15% | $0 – $57,375 |
| 20.5% | $57,375 – $114,750 |
| 26% | $114,750 – $177,882 |
| 29% | $177,882 – $253,414 |
| 33% | $253,414 or more |
Social Contributions
- CPP (Canada Pension Plan): 5.95% (capped at $4,075.75).
- EI (Employment Insurance): 1.66% (capped at $1,049.12).