Every pay period, your gross pay takes a hit before it reaches your bank account. If you've ever looked at your pay stub and wondered where the money went, this guide breaks it all down.
The Main Deductions on a Paycheck
Most employees see three mandatory federal deductions, plus any applicable state and local taxes:
| Deduction | Rate (2026) | Who Pays | |-----------|-------------|----------| | Federal income tax | 10%–37% (depends on income) | Employee | | Social Security | 6.2% (up to $176,100) | Employee + Employer match | | Medicare | 1.45% (+ 0.9% above $200k) | Employee + Employer match | | State income tax | 0%–13.3% (varies by state) | Employee |
Federal Income Tax Withholding
Federal income tax is not a flat rate — it's a progressive bracket system. Only the portion of your income within each bracket is taxed at that rate.
For 2026, the brackets for a single filer are:
- 10% — up to $11,925
- 12% — $11,926 to $48,475
- 22% — $48,476 to $103,350
- 24% — $103,351 to $197,300
- 32% — $197,301 to $250,525
- 35% — $250,526 to $626,350
- 37% — above $626,350
Your employer uses the information on your W-4 to estimate how much to withhold each pay period. If you claim extra allowances or have additional withholding, that changes the amount.
FICA Taxes: Social Security + Medicare
FICA stands for the Federal Insurance Contributions Act. These are flat-rate taxes:
- Social Security: 6.2% of wages up to $176,100 (2026 wage base). Once you earn over that, Social Security withholding stops for the year.
- Medicare: 1.45% on all wages, with an extra 0.9% on earnings over $200,000.
Your employer matches both Social Security and Medicare — so the full contribution is 12.4% + 2.9% combined. You only see your half on your pay stub.
State Income Tax
State taxes vary significantly:
- No income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
- Flat rate: States like Illinois (4.95%) and Pennsylvania (3.07%) tax all income at a single rate
- Progressive: States like California (up to 13.3%) and New York (up to 10.9%) use brackets similar to the federal system
Pre-Tax Deductions Reduce Your Taxable Income
If you contribute to a 401(k), HSA, or FSA, those contributions come out of your paycheck before taxes are calculated. This means:
- Lower taxable income → lower federal and state income tax withholding
- FICA is still calculated on your full gross pay (for 401k; HSA reduces FICA too)
For example: if you earn $5,000/month and contribute $500 to a 401(k), your federal income tax is calculated on $4,500, not $5,000.
What's Left: Your Net Pay
After all deductions, what remains is your net pay — the amount that actually hits your bank account.
A rough estimate for someone earning $60,000/year in a state with average taxes:
- Gross pay (monthly): $5,000
- Federal income tax: ~$530
- Social Security: $310
- Medicare: $73
- State income tax: ~$200
- Net pay: ~$3,887
The exact number depends on your W-4 elections, state, filing status, and any pre-tax deductions. The fastest way to get your actual number is to use the calculator at the top of this page.
Frequently Asked Questions
Why does my withholding change throughout the year?
Once you hit the Social Security wage base ($176,100 in 2026), that 6.2% deduction stops. Your net pay will noticeably increase for the rest of the year.
What if too much is withheld?
You'll get a refund when you file your tax return in April. If you consistently get large refunds, update your W-4 to reduce withholding — that's money you're giving the government as an interest-free loan.
What if too little is withheld?
You'll owe taxes at filing time and may face an underpayment penalty. If you have multiple jobs or significant non-wage income, check your withholding mid-year.