What actually comes out of a paycheck
- Federal income tax, the biggest line for most people, set by your income, filing status, and W-4.
- Social Security, a flat 6.2% of wages up to the annual cap.
- Medicare, 1.45% of all wages, plus 0.9% extra on high incomes.
- State income tax, anywhere from zero to over 10% depending on where you work.
- Before-tax deductions, like TSP or 401(k) contributions and health premiums. These lower your taxable income, so a 5% retirement contribution shrinks your check by less than 5%.
Nine states take nothing from your paycheck
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming charge no state income tax on wages. For veterans choosing where to settle, and for military families picking a state of legal residence, this is worth real money: a $68,000 earner keeps roughly $2,300 to $3,700 more per year in Texas than in California or New York.
Why tax-free military income is worth more than salary
BAH, BAS, and VA disability compensation never appear on a W-2 and are never taxed. A veteran receiving $2,000 in VA disability keeps all $2,000. To match that with a job, you would need to earn roughly $2,500 before taxes. Mortgage lenders know this, which is why they "gross up" tax-free income 25% when qualifying you for a loan. Our affordability calculator does that automatically, and it is often the difference of $40,000 or more in home price.
A worked example
A single veteran in Texas earns $68,000, paid every two weeks, contributing 5% to a 401(k) with $80 per check for health insurance. Gross per check is $2,615. Federal tax takes about $215, Social Security $162, Medicare $38, Texas takes nothing, and the retirement and health deductions total $211. Take-home lands near $1,989 per check, about $4,310 per month. Add $2,000 in VA disability and the household's real monthly income is $6,310, with the disability portion untouched by any tax.
Frequently asked questions
Why is my real paycheck different from this estimate?
Your W-4 settings, local city taxes, and benefits like dental or life insurance all shift the number. This calculator uses current federal brackets and state averages, so treat it as a close planning estimate, not a paystub.
Is BAH taxed?
No. The Basic Allowance for Housing is completely tax-free, and it does not even count toward Social Security wages. The same goes for BAS.
Is VA disability compensation taxed?
No, never, at any rating level, federal or state. It also is not reported on a tax return.
Does contributing to TSP or a 401(k) really lower my taxes?
Yes. Traditional contributions come out before federal and most state taxes, so a $100 contribution might only shrink your check by $75 to $80.
Is military retirement pay taxed?
Federally yes, unlike disability pay. State treatment varies: a growing majority of states now exempt some or all military retirement, including Texas and Florida which tax no income at all.
What is the difference between twice a month and every two weeks?
Twice a month is 24 checks a year, every two weeks is 26. The biweekly schedule gives you two "extra" checks a year, which are the easiest debt-payoff or savings windfalls on any calendar.
Do lenders use gross or take-home income?
Gross, before taxes. But the VA's residual income test works from what is left after taxes and bills, which is why VA qualification feels more like real life than other loans.
How do I take home more without a raise?
Fix an over-withholding W-4, capture any employer retirement match, use pre-tax health accounts, and if you are a veteran with a service-connected condition, file the disability claim you have been putting off. That last one is permanent tax-free income.