DoubleTaxationTaxes on salary: United States
How much tax and social security is paid on a salary in United States, what is left as take-home pay, and which special tax regimes exist.
Calculation for a gross salary of €60,000 per year
| Gross salary | $70,326 ≈ €60,000 |
|---|---|
| Income tax | |
| Federal income tax | $6,642 ≈ €5,667 |
| Michigan income tax | $2,738 ≈ €2,336 |
| City of Detroit income tax | $1,673 ≈ €1,428 |
| Employee contributions | |
| Social Security tax (OASDI) | $4,360 ≈ €3,720 |
| Medicare tax | $1,020 ≈ €870 |
| Take-home pay | $53,893 ≈ €45,980 |
| Employer contributions and payroll taxes | |
| Social Security tax (OASDI), employer | $4,360 ≈ €3,720 |
| Medicare tax, employer | $1,020 ≈ €870 |
| Federal unemployment tax (FUTA) | $42 ≈ €36 |
| Michigan unemployment insurance tax | $265 ≈ €226 |
| Employer's labour cost | $76,013 ≈ €64,852 |
Only some of the country's direct taxes and levies are counted: income tax on wages and compulsory contributions. Not counted: property and real-estate taxes; taxes on dividends, interest and other investment income; inheritance and gift taxes; indirect taxes such as VAT, excise and customs duties.
Official OECD figures for the average wage (Taxing Wages 2026, 2025 data): tax burden on the employee 24.3 %, including employer contributions 30.0 %. OECD
Special tax regimes
These regimes are not included in the calculation above: each has its own conditions.
FICA exemption for nonresident alien students, teachers and researchers (F-1, J-1, M-1, Q-1)
Who: Nonresident aliens in F-1, J-1, M-1 or Q-1 status: students, and J-1/Q-1 teachers and researchers for less than 2 calendar years.
Wages for services allowed by the visa status are exempt from Social Security and Medicare (7.65% employee share) while the person is a nonresident alien under IRC 7701(b); the exemption ends on a change of status (e.g. to H-1B) or on becoming resident. Federal and state income taxes still apply.
Qualified business income deduction (Section 199A)
Who: Individuals with business income from sole proprietorships, partnerships, S corporations, trusts and estates; not employees or C corporations.
Deduction of up to 20% of qualified business income (capped at 20% of taxable income less net capital gains); limits apply to specified service businesses and above income thresholds. Made permanent by the OBBBA (2025).
Legal basis: Internal Revenue Code § 199A; IRS, Business owners can claim a qualified business income deduction
Inversionista Residente Individual (Código de Incentivos, Ley 60-2019) — Puerto Rico, US territory
Who: Individuals relocating to Puerto Rico (a US territory with its own tax system) who become bona fide residents with a decree; for applications after 31 Dec 2026 — not resident in Puerto Rico in the 6 years before relocating.
Preferential Puerto Rico tax on dividends, interest and post-move capital gains: decrees applied for by 31 Dec 2026 — 0% (until 31 Dec 2035); applications after 31 Dec 2026 — 4% until 31 Dec 2055 (Act 38-2026; pending Fiscal Oversight Board endorsement when checked). US citizens are exempt from federal tax only on Puerto Rico-source income; wages earned there remain subject to FICA.
Legal basis: Código de Incentivos de Puerto Rico (Ley 60-2019), as amended by Ley 38-2026; DLA Piper summary
Foreign earned income exclusion (IRC § 911)
Who: US citizens and residents with a foreign tax home: bona fide residents of a foreign country for a full tax year, or physically present abroad 330 full days in 12 months
Earnings for work abroad are excluded from taxable income — up to USD 132,900 in 2026; a housing exclusion or deduction may be added. The remaining income is taxed at the rates that would apply without the exclusion.
Legal basis: 26 U.S.C. § 911; Rev. Proc. 2025-32, sec. 4.39; IRS, Foreign earned income exclusion
Enhanced deduction for seniors (IRC § 151(d)(5)(C))
Who: Taxpayers aged 65 or over at year-end with a Social Security number; married couples only on a joint return
An extra USD 6,000 deduction for each person aged 65+ (USD 12,000 if both spouses qualify) on top of the existing senior standard deduction. It is reduced by 6% of modified AGI over USD 75,000 (USD 150,000 joint). Applies for 2025 to 2028.
Tax residence
When United States treats you as a tax resident
- You are a U.S. citizen — the United States taxes your worldwide income wherever you live, and a treaty tie-breaker does not change that (saving clause).
- You held a green card this year — under § 7701(b) you are a U.S. resident regardless of how many days you spent in the United States.
- Your weighted days over three years reach 183 — you meet the substantial presence test and are a U.S. resident.
Assumptions
- Calculated with the OECD Taxing Wages methodology: income tax including local taxes plus employee social security; single person without children, tax year 2026, ECB rate of 2 January 2026.
- Single filer resident in Detroit, Michigan (as in OECD Taxing Wages); standard deduction USD 16,100; Michigan (4.25%) and Detroit (2.4%) taxes on gross income less the personal exemption (USD 5,900 and 600).
- FICA: Social Security 6.2% up to USD 184,500 and Medicare 1.45% on both sides; Additional Medicare Tax 0.9% above USD 200,000 — employee only.
- Employer also pays FUTA at 0.6% (6% less the 5.4% credit) on the first USD 7,000 and Michigan unemployment insurance tax at an average 2.94% (OECD estimate) on the first USD 9,000.
- Refundable EITC (federal and Michigan) not modelled — for a single person without children it phases out from about USD 19,000; employer health insurance and retirement plans are private.
- Local taxes — location: Detroit, Michigan
- Tax period: 2026-01-01 – 2026-12-31
- Exchange rate: 1 EUR = 1.1721 USD (ECB euro foreign exchange reference rate (USD), 02/01/2026)
Sources
- IRS, Tax inflation adjustments for tax year 2026 incl. OBBBA amendments (Rev. Proc. 2025-32): standard deduction 16,100; single brackets 12,400 / 50,400 / 105,700 / 201,775 / 256,225 / 640,600
- SSA, Contribution and benefit base 2026: 184,500
- IRS Topic no. 751, Social Security and Medicare withholding rates (6.2%, 1.45%, Additional Medicare 0.9% over 200,000)
- IRS Topic no. 759, FUTA (6.0% on first 7,000; credit up to 5.4%)
- Michigan Treasury, 2026 individual income tax rate 4.25%
- Michigan Treasury, calendar year tax information 2026 (withholding 4.25%, personal exemption 5,900)
- Michigan Treasury, City of Detroit Income Tax Withholding Guide (resident rate 2.4%, exemption 600)
- University of Michigan, Michigan city income tax withholding certificate, updated 16.02.2026 (Detroit 2.4% residents, 1.2% non-residents)
- EY, 2026 state unemployment insurance taxable wage bases (Michigan 9,000; FUTA 7,000)
- OECD Taxing Wages 2026, United States country note (Detroit, Michigan; FUTA net 0.6%; Michigan UI 2.94% average)
- ECB euro foreign exchange reference rates, USD, 2 January 2026: 1.1721
Data checked: 01/11/2026. An indicative calculation for a typical case. Not tax advice.