FIT and SIT taxes on your paycheck are federal income tax and state income tax: the two income-based amounts your employer withholds from your wages and sends to the IRS and your state’s revenue department. The federal government and most states run on a pay-as-you-go system, so instead of facing one large bill in April, you pay throughout the year through these deductions.1Internal Revenue Service. Pay as You Go, So You Won’t Owe: A Guide to Withholding, Estimated Taxes and Ways to Avoid the Estimated Tax Penalty How much comes out of each check depends on what you earn, your filing status, where you live and work, and what you put on your W-4.
What FIT Means on Your Paycheck
Federal Income Tax funds the federal government. Every employer in the country is legally required to withhold it from your wages and remit it to the IRS.2Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source The amount isn’t a flat percentage of your paycheck. The federal system is progressive: lower rates apply to your first dollars of income, and higher rates apply only to income above certain thresholds.
A common misunderstanding is that crossing into a higher bracket taxes all your income at that higher rate. It doesn’t. If you’re single with $60,000 in taxable income, you pay 10% on the first $12,400, 12% on the next chunk up to $50,400, and 22% only on the portion above that. Your effective rate ends up well below 22%.
2026 Federal Tax Brackets
Seven federal rates apply in 2026: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. They apply to your taxable income after the standard deduction, not to your gross pay. The 2026 standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Brackets for single filers in 2026:4Internal Revenue Service. Revenue Procedure 2025-32
- 10% up to $12,400
- 12% from $12,401 to $50,400
- 22% from $50,401 to $105,700
- 24% from $105,701 to $201,775
- 32% from $201,776 to $256,225
- 35% from $256,226 to $640,600
- 37% over $640,600
Brackets for married couples filing jointly:
- 10% up to $24,800
- 12% from $24,801 to $100,800
- 22% from $100,801 to $211,400
- 24% from $211,401 to $403,550
- 32% from $403,551 to $512,450
- 35% from $512,451 to $768,700
- 37% over $768,700
Brackets for heads of household:
- 10% up to $17,700
- 12% from $17,701 to $67,450
- 22% from $67,451 to $105,700
- 24% from $105,701 to $201,750
- 32% from $201,751 to $256,200
- 35% from $256,201 to $640,600
- 37% over $640,600
How Your FIT Withholding Is Calculated
Your employer isn’t guessing at the number. The calculation starts with the Form W-4 you filled out when hired, which tells payroll your filing status, dependents, and any additional income or deductions you want factored in. If you never turned in a W-4, your employer defaults to withholding as if you were single with no adjustments, which usually pulls out more tax than necessary.5Internal Revenue Service. Topic No. 753, Form W-4, Employees Withholding Certificate
Payroll then applies your gross earnings and pay frequency to the IRS withholding tables in Publication 15-T.6Internal Revenue Service. 2026 Publication 15-T Federal Income Tax Withholding Methods In effect, the formula prorates your standard deduction across your pay periods, subtracts it from your period earnings, and applies the brackets to what remains.
What SIT Means on Your Paycheck
State Income Tax works the same way from the paycheck side: your employer withholds a share of your wages and sends it to the state revenue department instead of the IRS. The money funds state services like public schools, roads, and law enforcement. Beyond that basic mechanic, state systems differ a lot.
Some states use a flat rate where every earner pays the same percentage. Others use brackets like the federal system, at lower rates. Across states that impose an income tax, top rates run from under 3% to over 13%. Your employer follows the rules of the state where the work is performed, which can get complicated for companies with employees in multiple locations.
States That Don’t Withhold SIT
Nine states impose no personal income tax on wages, so if you live and work in one of them your SIT line will show zero: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. These states fund their budgets through other sources such as sales tax, property tax, or natural resource revenue.
New Hampshire is the newest addition. It historically taxed interest and dividend income but never wages, and it fully repealed that remaining tax effective January 1, 2025. Washington doesn’t tax wages either, though it does impose a separate tax on capital gains above a threshold for high earners; that wouldn’t appear on a normal paycheck.
Working in One State and Living in Another
If you commute across a state line, you might worry about paying income tax to both states. About 16 states and the District of Columbia have reciprocity agreements that prevent this. Under such an agreement, your employer withholds only for the state where you live. You typically need to file a withholding exemption form with your employer to activate it.
When no reciprocity agreement is in place, you’ll likely file returns in both states. Most states offer a credit for taxes paid to another state, so you won’t pay full tax twice on the same income, but the credit may not fully close the gap if the rates differ. Remote workers who relocated should pay close attention: some states still treat your income as taxable based on where your employer’s office sits.
Local Income Tax Lines
FIT and SIT aren’t the only income-based deductions that can show up on a paystub. Thousands of cities, counties, and school districts across roughly 16 states impose their own local income taxes, and your employer withholds those as well. If you work somewhere like New York City, Philadelphia, or Detroit, you’ll see an additional local withholding line that can add several percentage points on top of state tax. Some localities charge a flat dollar amount per pay period instead of a percentage.
How FIT and SIT Differ From FICA
People new to paystubs often confuse FIT with FICA, but they’re separate. FICA is the 7.65% deduction (6.2% for Social Security and 1.45% for Medicare) that funds those two programs. FIT funds general federal operations. You can adjust FIT withholding through your W-4; you cannot adjust FICA, because those rates are set by statute.
Withholding on Bonuses
Bonuses, commissions, and other supplemental wages don’t go through the regular withholding calculation. Employers can apply a flat federal withholding rate of 22% to supplemental pay.6Internal Revenue Service. 2026 Publication 15-T Federal Income Tax Withholding Methods If your supplemental wages for the year exceed $1 million, the rate on the excess jumps to 37%. This is the withholding rate, not the tax you actually owe on the bonus. Depending on your total income, you might get some of it back at filing time or owe more.
Claiming Exempt From FIT
If you had no federal income tax liability last year and expect none this year, you can claim an exemption from FIT withholding on your W-4, and your employer will stop withholding federal income tax from your regular paychecks.6Internal Revenue Service. 2026 Publication 15-T Federal Income Tax Withholding Methods This is most common for students or very low-income workers whose annual earnings fall below the standard deduction. The exemption expires at the start of each year, so you must submit a new W-4 each February to keep it in place. Claiming exempt when you don’t qualify can lead to a surprise tax bill and penalties.
When to Adjust Your Withholding
Your W-4 isn’t a one-and-done form. The IRS recommends checking your withholding any time your situation changes: marriage, divorce, a new child, buying a home, taking a second job, or losing a source of income.7Internal Revenue Service. Tax Withholding: How to Get It Right Changes in non-wage income like dividends, capital gains, or freelance work also matter.
The IRS Tax Withholding Estimator is a free online tool that walks you through your income, deductions, and credits, then tells you what to put on a new W-4.8Internal Revenue Service. Tax Withholding Estimator If you owed a large amount last April or received a refund of several thousand dollars, your withholding is off. A big refund feels good, but it means you lent the government money interest-free all year. Getting your W-4 right keeps that money in your paycheck.