Methodology
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.
How to Use This Page With the Rest of SalaryLabs
Methodology is the place to verify how a number is produced, not the only place where limits should appear. Our goal is that each calculator and guide explains its most important assumptions on-page, while this methodology page acts as the deeper reference when a decision depends on the model details.
- Use the calculator page first when you need a fast answer for your own inputs.
- Use a guide page next when you need help interpreting what that answer means.
- Use methodology here when the assumption itself matters: filing status, standard deduction treatment, FICA limits, overtime rules, or simplified state-tax modeling.
If a result looks materially off, compare the relevant section below with the inputs you entered, then use the Contact page to report specifics.
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):
- Subtract the standard deduction from gross income to get taxable income.
- Apply each marginal rate only to the income within that bracket.
- 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
Changelog
Material updates to formulas, data anchors, and project framing.
- 2026-05: Project repositioned as a utility/calculator site. Editorial-team framing removed. AI disclosure added.
- 2026-04: Salary Time Machine and Salary Heatmap interactive panels added.
- 2026-01: Updated to 2026 IRS tax brackets, $184,500 SSA wage base, and 2026 standard deduction figures ($16,100 single / $32,200 MFJ / $24,150 HOH).
How to Verify a Result
If a result looks wrong, first check the assumptions on the calculator page itself: filing status, hours, weeks worked, state tax rate, and whether the page is estimating with standard deductions only. Then compare the formula on this page with the primary source linked here or on the relevant tool. If the issue still looks real, send the page URL, your exact inputs, and the result you saw to [email protected].
Found a formula error? Email [email protected] with the page, inputs, and result you saw. See also: Editorial Policy · Corrections Policy · About SalaryLabs