Minimum Wage After Taxes: What a Paycheck Really Delivers
Full-time work at the federal minimum wage of $7.25 an hour pays $15,080 a year — and almost all of it stays with you. The tax bill on that income is just FICA: $1,154, leaving $13,926, or about $1,161 a month. Federal income tax takes $0, because the standard deduction is larger than the entire salary. Here is how the numbers work at every wage level, and why low earners face the gentlest tax code in the system.
The quick answer at $7.25 an hour
A 40-hour week at the federal minimum, 52 weeks a year, produces these lines for a single filer in 2026:
| Line | Texas (no state tax) | California |
|---|---|---|
| Gross annual ($7.25 × 2,080 hours) | $15,080 | $15,080 |
| Federal income tax | $0 | $0 |
| FICA (7.65%) | −$1,154 | −$1,154 |
| State income tax | $0 | −$194 |
| Net annual pay | $13,926 | $13,732 |
| Effective tax rate | 7.7% | 8.9% |
The zero federal line is not a loophole — it is the design. The $16,100 standard deduction for a single filer exceeds $15,080 of wages, so taxable income is zero before the first bracket even applies. Only FICA, which has no deduction, touches the paycheck.
Take-home at common hourly wages
Most minimum-wage workers earn somewhat more than the floor, and most states set their own floors above $7.25. The table below shows a 2,080-hour year at each rate, single filer, in a no-tax state and in California:
| Hourly wage | Gross / year | Net — no-tax state | Net — California | Effective rate |
|---|---|---|---|---|
| $7.25 (federal floor) | $15,080 | $13,926 | $13,732 | 7.7%–8.9% |
| $10.00 | $20,800 | $18,739 | $18,430 | 9.9%–11.4% |
| $13.00 | $27,040 | $23,877 | $23,413 | 11.7%–13.4% |
| $15.00 | $31,200 | $27,249 | $26,619 | 12.7%–14.7% |
| $16.00 | $33,280 | $28,920 | $28,207 | 13.1%–15.2% |
| $20.00 | $41,600 | $35,606 | $34,532 | 14.4%–17.0% |
Two patterns matter. First, between $7.25 and roughly $15 an hour the effective rate creeps up only slowly, because taxable income stays small after the standard deduction. Second, the jump between $15 and $16 an hour looks abrupt in the table — that is where a meaningful slice of wages first crosses into the 12% federal bracket, so each extra dollar of wages starts costing more in tax than the dollars before it.
The monthly budget view
Hourly workers usually think in monthly terms, so here is the no-tax-state net converted:
| Hourly wage | Net per month | Net per week | Net per hour worked |
|---|---|---|---|
| $7.25 | $1,161 | $268 | $6.70 |
| $10.00 | $1,562 | $360 | $9.01 |
| $15.00 | $2,271 | $524 | $13.10 |
| $16.00 | $2,410 | $556 | $13.90 |
| $20.00 | $2,967 | $685 | $17.12 |
Reading the last column bottom-up tells the real story of low-wage taxation: at $7.25 an hour, you keep $6.70 of every hour worked. At $20, you keep $17.12. The tax system takes its smallest share from the smallest paychecks — by design, through the standard deduction, and through refundable credits that this estimate does not even count.
Why the effective rate is so low at the bottom
Three features of the tax code stack in favor of low earners:
The standard deduction wipes out the base. A single filer can earn $16,100 before any dollar becomes federally taxable. Full-time minimum wage does not reach that line.
The lowest brackets are thin by design. Even past the deduction, the first $12,400 of taxable income is taxed at just 10% — the code’s deliberate on-ramp.
Refundable credits pay on top. The Earned Income Tax Credit is a federal program that pays money back to qualifying low-income workers, even those who owe no income tax. A single worker with no children can qualify for a few hundred to roughly two thousand dollars depending on the year’s parameters; workers with children qualify for substantially more. Because EITC depends on household details this calculator does not model, the net figures in the tables above are understated for workers who claim it. State versions of the credit, in New York, California, and about thirty other states, add further refunds.
State minimum wages change the picture more than state taxes
The federal $7.25 floor applies everywhere, but over thirty states set higher floors, and the gap is enormous. California’s and New York’s minimum wages sit above $15 an hour — more than double the federal floor. A full-time worker at a $15 state minimum in Florida grosses $31,200 and nets about $27,249, versus $13,732 for the same hours at the federal floor — because the wage is more than double, not because of any tax difference.
The practical takeaway inverts the usual framing: at low incomes, the wage your state mandates matters far more than the tax your state levies. A no-tax state with a $7.25 floor pays less take-home than a high-tax state with a $16 floor — full-time at California’s higher minimum still nets $28,207, twice the $13,732 at the federal floor — and no amount of tax optimization closes that gap.
Part-time and variable hours
Hours drive everything at the bottom of the wage scale. A 20-hour week at $7.25 — 1,040 hours a year — grosses $7,540 and nets $6,963, an effective rate of just 7.7%. Every added hour pays the same FICA share but no federal income tax, so grossing up from part-time to full-time at minimum wage raises net pay almost exactly 7.65% less than it raises gross pay.