The Paycheck Series · 8 min read

Your Paycheck Decoded

You earned one number. Your bank account saw another. Here is where the rest went — and what you can do about it.

The number that confused every physician

Your offer letter said $240,000. Your first paycheck looked nothing like that number divided by 26. The difference between gross and net is not a small adjustment. For a physician, it is often 35 to 45 percent of the headline number. Most of that money is recoverable, deferrable, or at least worth understanding. None of it was explained in medical school.

The five things taken out before you see anything

Tap each card. Every physician paycheck has the same five categories of deductions.

Federal income tax withholding

Calculated from your W-4 elections and projected annual income. Often over-withheld for new attendings, leading to a large refund. A large refund is not a win — it is an interest-free loan to the government.

FICA — Social Security + Medicare

7.65 percent of wages up to the Social Security wage base ($184,500 in 2026), then 1.45 percent Medicare on everything above. High earners pay an extra 0.9 percent Medicare surcharge over $200,000.

State income tax

Varies wildly. Nine states have no income tax. California, Hawaii, and New York exceed 10 percent at attending income. Pennsylvania is a flat 3.07 percent. State tax often gets ignored in job comparisons.

403b or 401k contribution

Pre-tax retirement deferral. The 2026 limit is $24,500. If your employer matches, contribute at least enough to capture the match — that match is a 100 percent immediate return.

Health insurance premium

Often $200-600/month for a physician on an employer plan. Family coverage can exceed $1,500/month. Paid pre-tax through Section 125, which lowers your taxable income.

See your real take-home

This step is an interactive calculator. Open the full module to try it with your numbers →

Effective vs marginal tax rate

The 403b decision

This step is an interactive scenario. Open the full module to try it with your numbers →

What to do this week

  • Your effective tax rate is meaningfully lower than your bracket — never confuse the two when making decisions.
  • The 403b employer match is a guaranteed 100 percent return. Capture it before considering anything else.
  • Pre-tax 403b contributions lower AGI, which for PSLF candidates lowers your IDR payment as well.
  • A large tax refund means you over-withheld. Adjust your W-4 to move that money into your pocket throughout the year.

Do this next: Find your most recent pay stub. Identify each of the five deduction categories. Calculate your actual effective tax rate by dividing total tax paid by gross pay.

Run this with your own numbers

The interactive version of this lesson works through your actual paycheck, loans, and benchmarks — and your AI advisor can take it from there. Free to start, no card required.

Create a free account →Open the interactive module

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