Expect to lose roughly a quarter of your gross pay to federal income tax and payroll tax in a state with no income tax, and closer to a third once you add a high state income tax. There is no single PAYE system that quietly settles everything for you, and there is no NHS, so your US paycheck is not the whole story. Health insurance often comes out of your pay too. The good news is the math is learnable, and where you live changes it a lot.
Three separate tax layers, not one
The biggest shock for someone coming from a PAYE country is that US pay is taxed in three separate layers, and no single one settles the whole bill.
Layer 1: Federal income tax
The federal government taxes income on a graduated, "marginal" system: the first slice of income is taxed at a low rate, and each higher slice at a higher rate. Two words matter here:
- Your marginal rate is the rate on your last dollar earned.
- Your effective rate is the blended rate you actually pay across all your income, and it is always lower than your marginal rate.
A standard deduction shields the first chunk of income from tax entirely. So a tradesperson earning around the national electrician median (roughly $62,000 as of 2026) sits in a middle marginal bracket but pays a noticeably lower effective federal rate once the standard deduction and the lower brackets are counted. Do not panic at your marginal rate. It is not what you pay on everything.
Layer 2: FICA, the payroll tax
FICA is the US Social Security and Medicare tax, and it comes out from your first dollar. As an employee you pay 7.65% of gross wages (6.2% for Social Security and 1.45% for Medicare), and your employer pays a matching share. This is not optional and there is no allowance that exempts the first slice.
If you are self-employed (a 1099 tradesperson rather than an employee), you pay both halves, 15.3%, because you are both the worker and the employer. That is a real difference worth understanding before you agree to be paid as a subcontractor. See the tax section for the self-employed picture.
Layer 3: State income tax
This is where location swings your take-home the most. Nine states have no state income tax on earned income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Other states range from a low flat rate up to double-digit top rates. A move from a no-tax state to a high-tax one can cost you several percent of your gross for the same job.
The rough combined bite
Put the layers together and, as a concept:
- In a no-income-tax state, expect to lose roughly 22% to 26% of gross to federal income tax plus FICA combined.
- In a high-tax state, add roughly another 6% to 9% on top, bringing total deductions to around 28% to 35% of gross.
These are ballpark ranges, not a promise. Your real number depends on your filing status, dependents, deductions, and credits. Run your own situation through a tax calculator, and see Working in Your State for the local rate.
No PAYE, and no automatic safety net
Two more things that surprise newcomers:
- You file a tax return. There is no PAYE that reconciles everything behind the scenes. Tax is withheld from your paycheck through the year, and you file a return to settle up. Getting your withholding right matters so you are not hit with a bill.
- There is no statutory sick pay the way you may expect. Workers' compensation covers work-related injuries, but a non-work illness with no work usually means no income, unless your employer offers paid sick leave. Some states require it, which is a Working in Your State question.
The health insurance line: budget for it
There is no NHS. Health coverage is either through your employer or bought yourself, and either way it affects take-home:
- With an employer plan, a share of the premium usually comes out of your paycheck on top of taxes.
- Without one, you buy coverage on the marketplace at healthcare.gov, which is a real monthly cost.
- Union tradespeople often get stronger health benefits through multi-employer funds, one of the practical advantages of union membership.
Treat health insurance as a core line in your budget, not an afterthought. The full picture has its own guide.
Common questions
What is the difference between my marginal tax rate and my effective tax rate?
Your marginal rate is the rate charged on your last dollar of income. Your effective rate is the blended rate you actually pay across all your income, and it is always lower. Because the US taxes income in graduated slices and a standard deduction shields the first chunk, someone in, say, a 22% marginal bracket pays a meaningfully lower effective federal rate overall. When people quote a scary bracket number, that is the marginal rate, not what you pay on everything. Verify current brackets at irs.gov.
Which US states have no state income tax?
Nine states have no state income tax on earned income as of 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For the same salary, living in one of these keeps several percent more of your gross than a high-tax state does. Every other state taxes income at rates from a low flat percentage up to double digits, so where you settle genuinely changes your take-home. See Working in Your State for the local rate.
Is there PAYE in the US like in the UK?
No. The US has tax withholding from your paycheck, but no PAYE system that automatically settles your whole tax bill. You file an annual tax return to reconcile it. Getting your withholding set correctly matters, because too little means a bill at tax time and too much means an interest-free loan to the government. This is different from a PAYE country where most employees never file. A tax professional can help you set it up right your first year.
Why is my take-home lower than my gross even in a no-tax state?
Because federal income tax and FICA payroll tax (7.65% for an employee) still come out, plus often a share of your health insurance premium, even where there is no state income tax. In a no-income-tax state you can still expect to lose roughly a quarter of gross to federal tax and FICA before health coverage. If you are self-employed you pay the full 15.3% FICA instead of 7.65%. Run your own numbers through a tax calculator.
The honest bit
- The FICA rates (7.65% for employees, 15.3% self-employed) and the list of nine no-income-tax states are current for 2026, but federal brackets, the standard deduction, and thresholds change every year. Verify at irs.gov before relying on any figure.
- No per-state income-tax rate tables here on purpose. State rates vary widely and change, so use a tax calculator for your situation and see Working in Your State, and check whether your state requires paid sick leave.
- This is general information, not tax advice. For your actual liability, credits, and withholding, use a qualified tax professional.
- If you are new to the country, your immigration status can affect how you file and which credits you can claim. That is a question for a tax professional and, on the status side, a licensed immigration attorney. Never take tax or immigration advice from a notario or unlicensed consultant, who cannot legally give either.
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Keep reading
Templates you might need
Sources
- IRS - Taxation of Nonresident Aliens · Which income is taxed and at what rate turns on whether you are a resident or a nonresident alien for tax purposes, which is a tax test and not an immigration one
- IRS - Determining an Individual's Tax Residency Status · The substantial presence test, which is the day count that decides which of the two regimes applies to you
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