What Your Paycheck Deductions Actually Are

Your paycheck shows gross pay (what you earned) and net pay (what you take home). The difference is taxes and other deductions. Federal income tax, Social Security tax, and Medicare tax come out automatically—your employer withholds them and sends them to the government. Some states and cities add their own income tax on top. You can see the exact amounts on your pay stub, which lists each deduction separately.

The amount withheld depends on three things: how much you earn, how often you get paid, and what you told your employer on Form W-4. That form is where you claim dependents and adjust your withholding. If too much comes out, you get a refund when you file taxes. If too little comes out, you owe money.

Key Takeaways

  • Your pay stub shows gross pay, each tax withheld (federal, Social Security, Medicare, and sometimes state or local), and your net pay—the amount you actually receive.
  • Federal income tax withholding is based on your W-4 form, your pay frequency, and your income; the IRS publishes tables employers use to calculate it.
  • Social Security tax is always 6.2 percent of gross pay up to a yearly cap, and Medicare tax is always 1.45 percent with no cap.
  • You can estimate your annual tax by multiplying your per-paycheck withholding by the number of pay periods in a year, then comparing it to what you expect to owe.
  • If your withholding is too high or too low, you can file a new W-4 with your employer to adjust it before next year's tax season.

Finding the Numbers on Your Pay Stub

Your pay stub is the document your employer gives you with each paycheck—either printed or digital. It shows your gross pay at the top, then lists every deduction below. Look for these lines: Federal Income Tax Withheld (or FIT), Social Security Tax (or OASDI), Medicare Tax, and any state or local income tax. The net pay or take-home amount is at the bottom.

If you cannot find your pay stub, ask your payroll department or check your employer's online portal—most companies now post stubs there. You need the actual withholding amounts, not estimates. If you are self-employed or a contractor, you do not receive a pay stub; instead, you calculate taxes yourself based on your income.

How Federal Income Tax Withholding Works

Federal income tax is not a flat percentage. Your employer uses IRS withholding tables that account for your filing status (single, married, head of household), the number of dependents you claimed on your W-4, and your pay frequency. The IRS updates these tables yearly, so the amount withheld can change even if your salary stays the same.

To find out what the IRS expects your withholding to be, you can use the IRS Withholding Calculator on irs.gov. Enter your income, filing status, dependents, and other income sources. The calculator tells you whether your current withholding is on track or if you should adjust your W-4. This is especially useful if you have a spouse who works, side income, or investment income.

If you want to see the actual withholding table your employer uses, the IRS publishes them in Publication 15-T. These tables show the dollar amount withheld based on your gross pay and W-4 entries. Most people do not need to read the tables directly—your pay stub already shows what was withheld—but they exist if you want to verify the math.

Calculating Social Security and Medicare Tax

These two taxes are simpler than federal income tax because they are flat percentages with no adjustments for dependents or filing status. Social Security tax is 6.2 percent of your gross pay, but only up to a yearly earnings cap. In 2024, that cap is $168,600, meaning once you earn that much in a year, no more Social Security tax comes out of your remaining paychecks. Medicare tax is 1.45 percent of your gross pay with no cap—it comes out of every dollar you earn, all year.

If your gross pay is $2,000 per paycheck, your Social Security withholding is $124 (2,000 × 0.062) and your Medicare withholding is $29 (2,000 × 0.0145). These amounts appear on every pay stub. If you earn over $200,000 as a single filer (or $250,000 married filing jointly), an additional 0.9 percent Medicare tax applies to income above that threshold.

State and Local Income Tax

Not all states have income tax. Nine states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (for dividends and interest only)—do not tax wages. If you live and work in one of these states, you will not see state income tax on your pay stub.

If your state does tax income, the rate varies widely. Some states use a flat percentage; others use brackets like the federal system. A few cities, including New York City and Columbus, Ohio, also withhold local income tax. Your pay stub will show each one separately. To find your state's rate and rules, search "[your state] income tax" or visit your state's revenue or taxation department website.

Estimating Your Annual Tax Burden

To see roughly how much you will owe or receive back, multiply your per-paycheck withholding by the number of pay periods in a year. If you are paid biweekly, multiply by 26. If you are paid weekly, multiply by 52. If you are paid monthly, multiply by 12. This gives you your estimated annual withholding.

Then estimate what you actually owe. Use the IRS tax tables or a tax calculator based on your expected annual income, filing status, and dependents. Compare the two numbers. If your withholding is much higher than what you owe, you will likely get a refund. If it is much lower, you will owe money when you file. The closer they are, the better your W-4 is calibrated.

This estimate works best if your income stays steady throughout the year. If you get a bonus, a raise, or a second job partway through the year, recalculate. You can also file a new W-4 anytime to adjust your withholding going forward—you do not have to wait until next year.

When to Adjust Your W-4

If your estimate shows you are withholding too much or too little, file a new Form W-4 with your employer's payroll department. You do not need your employer's permission; you can change it whenever your situation changes. Common reasons to adjust include getting married or divorced, having a child, taking a second job, or your spouse starting or stopping work.

The new W-4 takes effect on your next paycheck or within a few pay periods, depending on your employer's payroll schedule. Your withholding will change starting then. If you are near the end of the year and realize you will owe a lot, adjusting your W-4 will not help that year—you have already earned most of your income. But it will prevent the same problem next year.

Frequently Asked Questions

Why does my withholding change even though my salary is the same?

The IRS updates withholding tables every year, and tax brackets change. Your employer automatically uses the new tables, so your withholding may go up or down. If you got married, had a child, or changed your W-4, that also changes your withholding. Check your pay stub each year to see if the amount shifted.

Can I claim zero dependents on my W-4 to get a bigger refund?

Yes, claiming fewer dependents increases your withholding and usually results in a larger refund. However, this means less money in your paycheck throughout the year. It is better to adjust your withholding to match what you actually owe, so you keep more of your money now instead of waiting for a refund later.

What if I have two jobs—how do I calculate taxes?

Each employer withholds based on your W-4 as if that job is your only income. If you have two jobs, you may under-withhold because each employer does not know about the other. Use the IRS Withholding Calculator and enter both incomes, then adjust your W-4 at one or both jobs to increase withholding. You can also have extra money withheld on one W-4 to cover the shortfall.

Is the amount on my pay stub the same as what I owe in taxes?

No. Your pay stub shows what your employer withheld, not what you actually owe. When you file your tax return, the IRS calculates what you owe based on your total income, deductions, and credits. If you withheld more than you owe, you get a refund. If you withheld less, you owe the difference.

How do I know if my withholding is correct?

Use the IRS Withholding Calculator on irs.gov. It compares your expected annual withholding to what you will likely owe. If the numbers are close, your W-4 is set correctly. If you are way off, adjust your W-4 with your employer.