Methodology – How We Calculate Your New Jersey Paycheck (2025)
We compute take-home pay using current IRS Publication 15-T (2025) rules and the latest New Jersey Division of Taxation tables, including separate employee contributions for UI • WF • TDI • FLI. Everything here mirrors how real payroll systems work.
1) Calculation order
- Gross pay (salary per period or hourly × hours + OT).
- Pre-tax deductions reduce taxable wages (401k/403b/457, HSA/FSA, Section 125).
- Federal withholding via IRS Pub. 15-T (2025), then FICA (SS + Medicare).
- NJ state income tax using NJ percentage method for your pay frequency.
- NJ payroll programs (UI, WF, TDI, FLI) with wage-base caps.
- Subtract post-tax deductions (Roth, dues, garnishments).
- Return Net pay.
2) Gross pay
Annual salary ÷ pay periods (weekly, biweekly, semimonthly, monthly).
(Regular hours × rate) + (OT hours × rate × multiplier, e.g., 1.5× or 2×).
3) Pre-tax deductions
- 401(k)/403(b)/457 (% or $)
- HSA / FSA
- Section 125 medical, dental, vision, commuter
These reduce federal taxable wages; some also reduce NJ and/or FICA depending on plan type.
4) Federal income-tax withholding (IRS Pub. 15-T, 2025)
We implement the Percentage Method Tables for Automated Payroll Systems. Inputs include filing status, the multiple-jobs checkbox (W-4 Step 2), dependents amount (Step 3), and Step 4 adjustments (other income, deductions, extra withholding).
Why this mirrors employer payroll
The percentage method is explicitly designed for automated systems and aligns with how many payroll providers calculate per-period withholding.
5) Social Security & Medicare (FICA)
- Social Security (OASDI): 6.2% up to $176,100 (2025 wage base).
- Medicare: 1.45% on all wages.
- Additional Medicare: +0.9% on wages above $200,000 (employee threshold).
We track YTD so Social Security stops at the cap; Additional Medicare applies only to wages over the threshold.
6) New Jersey state income tax
We use New Jersey’s percentage method withholding tables for your selected pay frequency (weekly, biweekly, semimonthly, monthly). Brackets and allowance values are applied per period as published by the NJ Division of Taxation.
Allowances & per-period math
NJ applies its own allowance amounts and bracket cutoffs by pay period. We compute per-period taxable wages after allowances, then apply the progressive rates.
7) NJ payroll programs: UI • WF • TDI • FLI
| Program | Employee Rate (2025) | Wage Base | Max Employee $ |
|---|---|---|---|
| UI (Unemployment) | 0.3825% | $43,300 | $165.62 |
| WF/SWF (Workforce Dev.) | 0.0425% | $43,300 | $18.40 |
| TDI (Disability) | 0.23% | $165,400 | $380.42 |
| FLI (Family Leave) | 0.33% | $165,400 | $545.82 |
Each contribution stops once its annual wage base is reached; we handle this via YTD tracking.
8) Year-to-date (YTD) handling
Stops after YTD wages hit $176,100.
Stop after YTD reaches $43,300.
Stop after YTD reaches $165,400.
When a cap is crossed, your next paycheck’s net increases; our UI labels note the change.
9) Overtime & bonus
- Overtime: Regular wages + (OT hours × hourly × multiplier).
- Bonuses: We model both IRS methods: percentage and aggregate; see results page notes for how this affects that period’s withholding.
10) Official sources
11) Accuracy & disclaimer
This tool provides educational estimates—not tax or payroll advice. Actual pay depends on your employer’s payroll setup, your latest W-4, benefits, and local factors. Check your pay stub or consult a professional for official amounts.