W-2 employees pay federal income tax at rates from 10% to 37%, Social Security tax at 6.2%, and Medicare tax at 1.45%, all withheld from each paycheck before the money lands in your account. Most also owe state income tax, which ranges from zero in nine states to over 13% at the top. How much W-2 employees are taxed in total depends on income, filing status, and location, but the mechanics are the same everywhere: your employer withholds throughout the year, and you reconcile the balance when you file.
For a rough sense of scale, a single filer earning $50,000 pays about $3,340 in federal income tax after the standard deduction and $3,825 in FICA, for a combined federal bite near 14% of gross pay. State tax, if any, sits on top of that.
Federal Income Tax Brackets for 2026
Federal income tax is progressive: each slice of your income is taxed at a successively higher rate as you earn more. For the 2026 tax year, single filers face seven brackets:1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- 10% on taxable income up to $12,400
- 12% on $12,401 to $50,400
- 22% on $50,401 to $105,700
- 24% on $105,701 to $201,775
- 32% on $201,776 to $256,225
- 35% on $256,226 to $640,600
- 37% on income over $640,600
The key phrase is “taxable income,” not gross pay. Only the dollars inside each bracket are taxed at that bracket’s rate. A single filer with $60,000 in taxable income doesn’t pay 22% on the whole amount. They pay 10% on the first $12,400, 12% on the next portion up to $50,400, and 22% only on the last $9,600. Total federal income tax comes out to roughly $5,968, an effective rate just under 10% even though this filer sits “in the 22% bracket.”
Married couples filing jointly get brackets roughly double the single-filer widths through most of the structure. Head-of-household filers get wider brackets than single filers but narrower than joint. Same rates, different thresholds.
The Standard Deduction
Before any bracket math runs, you subtract your deduction from gross income. The 2026 standard deduction is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 A single filer earning $60,000 who takes the standard deduction has $43,900 in taxable income before the brackets touch it. That deduction is the single biggest reason most W-2 employees pay an effective federal rate well below their marginal bracket.
Itemizing is an option if mortgage interest, state taxes, charitable contributions, and other qualifying expenses add up to more than the standard amount. Most people don’t clear that threshold.
Social Security and Medicare (FICA)
On top of income tax, every W-2 paycheck loses a flat share to FICA, which funds Social Security and Medicare. No brackets, no standard deduction, no way around it.
- Social Security: 6.2% of wages, up to $184,500 in 2026. Once your year-to-date earnings cross that cap, Social Security withholding stops for the rest of the year.2Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
- Medicare: 1.45% of all wages, no cap.2Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
- Additional Medicare Tax: an extra 0.9% on wages above $200,000 for single filers, $250,000 for married filing jointly, or $125,000 for married filing separately.3Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Your employer pays a matching 6.2% and 1.45% on your behalf, though there’s no employer match on the Additional Medicare Tax.2Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates You never see that half on your stub. The combined FICA burden between you and your employer runs 15.3% of every dollar up to the Social Security cap.
For most W-2 employees earning under six figures, FICA actually takes a bigger chunk than federal income tax. Something to keep in mind when you look at your bracket and think that number is the whole story.
State and Local Income Tax
Nine states impose no individual income tax. Among the rest, rates run from roughly 1% to over 13% at the top. Some states use a single flat rate; others use progressive brackets similar to the federal system. Two employees earning the same salary in different states can take home meaningfully different pay.
A handful of cities and counties add their own local income or occupational taxes on top of the state rate. Those tend to be smaller, but in some metro areas they tack on another 1% to 4%.
If you live in one state and work in another, you can technically owe tax to both. Many neighboring states have reciprocity agreements that let you pay only in your home state, and your employer withholds accordingly. Without reciprocity, you generally file in both states and claim a credit in your home state for tax paid to the work state so the same income isn’t taxed twice. Confirm your states’ arrangement before your first paycheck so withholding gets set up correctly.
Pre-Tax Deductions That Lower the Bill
Several payroll deductions come out of gross pay before taxes are calculated. These are the biggest levers a W-2 employee has.
- Traditional 401(k) contributions: up to $24,500 in 2026, or $32,500 if you’re 50 or older. Workers aged 60 through 63 get a higher catch-up limit of $35,750 total. Each dollar contributed drops taxable income by a dollar.4Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Health Savings Accounts: on a high-deductible plan, up to $4,400 individual or $8,750 family in 2026. HSA contributions through payroll avoid both income tax and FICA.5Internal Revenue Service. Expanded Availability of Health Savings Accounts Under the One, Big, Beautiful Bill Act
- Healthcare Flexible Spending Accounts: $3,400 limit for 2026. Payroll-deducted FSA contributions also skip both income and FICA taxes.6FSAFEDS. Message Board
- Health insurance premiums: most employer plans run through a Section 125 cafeteria plan, so your share of the premium comes out pre-tax.7Office of the Law Revision Counsel. 26 U.S. Code 125 – Cafeteria Plans
The combined effect adds up. An employee earning $70,000 who puts $10,000 into a traditional 401(k) and $3,400 into an FSA drops taxable income to $56,600 before the standard deduction even applies.
How Your Withholding Gets Calculated
Your employer figures federal withholding from two inputs: your pay per period and the information on your Form W-4.8Internal Revenue Service. Tax Withholding The W-4 collects filing status, dependents, and any adjustments for other income or extra deductions.
The child tax credit is the adjustment that surprises people most. For 2026 it’s worth at least $2,200 per qualifying child under 17, and it reduces tax liability directly rather than lowering taxable income. Claiming children on your W-4 tells your employer to reduce per-paycheck withholding to reflect the credit you’ll take at year-end.9Internal Revenue Service. Child Tax Credit The credit phases out starting at $200,000 for single filers and $400,000 for married couples filing jointly.
Two Jobs or a Working Spouse
If you work two jobs, or you’re married and both of you earn income, a default W-4 will almost certainly under-withhold. Each employer treats its wages as your only income, applying the lower brackets and the full standard deduction on its own. Step 2 of the W-4 fixes this: use the IRS withholding estimator, fill out the multiple-jobs worksheet, or check the two-jobs box if the pay is roughly similar.10Internal Revenue Service. Form W-4 – Employee’s Withholding Certificate Skipping this step is one of the most common reasons W-2 employees owe a surprise balance in April.
Bonuses, Commissions, and Other Supplemental Pay
Bonuses, commissions, severance, and overtime count as supplemental wages. Your employer can withhold federal income tax on these at a flat 22%, regardless of your bracket or W-4 settings.11Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide Supplemental wages over $1 million in a calendar year are withheld at 37% on the excess.
The 22% is a withholding rate, not a final tax rate. If you’re in the 12% bracket, some of it comes back as a refund. If you’re in the 32% bracket, you’ll owe the difference when you file. FICA applies to bonuses just like regular wages: 6.2% Social Security up to the cap, 1.45% Medicare with no cap.
Avoiding an Underpayment Penalty
Federal tax is pay-as-you-go. If you don’t have enough withheld and owe $1,000 or more at filing, the IRS can charge an underpayment penalty, which is essentially interest on what should have been paid each quarter.
Two safe harbors keep you clear: pay at least 90% of what you owe for the current year, or pay at least 100% of last year’s total tax liability. If your adjusted gross income last year was over $150,000, that second threshold rises to 110%.12Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty Check your withholding with the IRS estimator whenever your income or life changes, and especially after picking up a second job, receiving a large bonus, or realizing significant investment income.
Year-End Reconciliation
Your employer remits withheld taxes to the IRS and your state on a regular schedule throughout the year. Every pay stub shows what was deducted for federal income tax, state income tax, Social Security, and Medicare. By January 31, your employer sends Form W-2 with total wages, total withholding, and pre-tax deductions for the calendar year.13Internal Revenue Service. About Form W-2, Wage and Tax Statement
On your Form 1040, you compare total withholding against your actual tax liability. Withhold more than you owe and you get a refund. Fall short and you owe the balance.14Internal Revenue Service. Tax Withholding for Individuals A large refund isn’t a windfall; it means you gave the government an interest-free loan for a year. A small refund or a small balance due means withholding was close to right. Adjust your W-4 whenever your pay or personal situation shifts and you’ll stay near that mark.