What Are Payroll Deductions? FICA, Pre-Tax, and Garnishments

Payroll deductions are the amounts your employer subtracts from your gross wages before handing you a paycheck. Some are required by federal or state law, some are ordered by a court, and some you elect yourself for benefits like health insurance or retirement savings. What’s left after every deduction comes off is your net pay, or take-home pay.

Mandatory Tax Withholdings

Federal law requires every employer to withhold income tax from your wages and send it to the IRS on your behalf.¹ This pay-as-you-go system spreads your annual tax bill across the year instead of leaving you with one large payment in April.² How much comes out of each check depends on what you put on Form W-4: your filing status, dependents, other income, and any extra withholding you request.

If you never file a W-4, your employer must withhold as if you were single with no adjustments, which typically takes out more than needed.³ Withholding is only an estimate. Too much withheld means a refund; too little means you owe, potentially with an underpayment penalty.

Most states require state income tax withholding as well. Nine states, including Alaska, Florida, Nevada, Texas, and Wyoming, have no individual income tax, so employees working there skip that line entirely. Some cities and counties add local income taxes on top of the state rate, so a pay stub may carry one state line or several depending on where you live and work.

Social Security and Medicare (FICA)

A separate set of mandatory deductions funds Social Security and Medicare under the Federal Insurance Contributions Act. Your employer withholds 6.2% of your gross wages for Social Security and 1.45% for Medicare, a combined 7.65% off every paycheck.⁴

These are flat rates, not graduated. Social Security has an annual earnings cap, though. In 2026, that cap is $184,500.⁵ Once your year-to-date wages hit that number, the 6.2% Social Security piece stops for the rest of the year. Medicare has no cap and applies to every dollar you earn.⁴

If your wages exceed $200,000 in a calendar year, your employer must start withholding an extra 0.9% additional Medicare tax on earnings above that threshold. That $200,000 trigger applies to everyone at withholding time, but the actual tax you owe when you file uses different thresholds: $250,000 for married filing jointly and $125,000 for married filing separately.⁶ Any difference gets sorted out on your return.

Court-Ordered Wage Garnishments

Not every mandatory deduction comes from tax law. When a court or a government agency orders your employer to withhold part of your pay to satisfy a debt, that’s a wage garnishment. Common triggers are unpaid child support, defaulted student loans, and creditor judgments for things like medical bills or credit card balances.

Federal law caps how much can be taken. For ordinary consumer debts, the most a creditor can garnish is the lesser of 25% of your disposable earnings or the amount by which your weekly disposable earnings exceed $217.50, a figure tied to 30 times the federal minimum wage of $7.25 per hour.⁷ If your weekly disposable earnings are $217.50 or less, nothing can be taken for ordinary debts.

Child support orders reach further:

Up to 50% of disposable earnings if you’re supporting another spouse or dependent child
Up to 60% if you’re not supporting another spouse or child
An additional 5% on top of either limit if payments are more than 12 weeks overdue

Those child support limits sit in the same federal statute as the ordinary-debt caps.⁷ Defaulted federal student loans work differently: the Department of Education can direct your employer to withhold up to 15% of your disposable pay administratively, with no court judgment required. When more than one garnishment order lands at once, child support generally takes priority, followed by earlier-filed orders.⁸

Voluntary Pre-Tax Deductions

Beyond what the law requires, you can elect deductions that come out before taxes are calculated. Pre-tax deductions lower your taxable income, which reduces the federal income tax you owe and, for some items, your FICA taxes too. For any of this to work, your employer has to offer the benefits through a written plan, often called a Section 125 or cafeteria plan, that meets specific federal rules.⁹

The most common pre-tax deductions are:

Health, dental, and vision insurance premiums for employer-sponsored coverage
Traditional 401(k) or 403(b) contributions, where you defer income tax until you withdraw the money in retirement
Health Savings Account contributions, available if you’re enrolled in a high-deductible health plan and used tax-free for qualified medical expenses
Flexible Spending Account contributions for health care or dependent care, with unspent balances generally forfeited at year end

You usually pick these during your employer’s annual open enrollment, and your choices lock in for the plan year unless you have a qualifying life event like marriage, a birth, or loss of other coverage.

2026 Contribution Limits

The IRS updates most contribution caps each year for inflation. For 2026:

401(k) and 403(b): $24,500 in elective deferrals, plus $8,000 in catch-up contributions if you’re 50 or older. Workers aged 60 through 63 get a higher catch-up limit of $11,250.¹⁰
HSA: $4,400 for self-only coverage or $8,750 for family coverage.¹¹
Health care FSA: $3,400 per year.¹²
Dependent care FSA: $7,500 per household, or $3,750 if married filing separately.¹²

Going over these limits can bring tax penalties, so watch your year-to-date totals, especially if you change jobs mid-year and contribute under more than one employer’s plan.

Voluntary Post-Tax Deductions

Some elective deductions come out after taxes are calculated and don’t reduce your current taxable income. The most common is a Roth 401(k) contribution. You pay income tax on the money now, and qualified withdrawals in retirement, including all investment earnings, come out tax-free.¹³ Roth 401(k) contributions share the same annual limits as traditional 401(k) contributions.¹⁰

Other post-tax items include union dues, charitable giving through payroll deduction, and premiums for supplemental life or disability coverage. These are conveniences: your employer handles the recurring payment out of your check so you don’t have to.

Reading Your Pay Stub and Catching Errors

Your pay stub should itemize every deduction: federal and state income tax, Social Security, Medicare, insurance premiums, retirement contributions, and any garnishments. The federal Fair Labor Standards Act does not itself require employers to hand out pay stubs, but most states do. Federal law does require employers to keep records of all wage deductions.¹⁴

Check your stubs regularly. Your benefit deductions should match what you elected at open enrollment, and your tax withholding should track your most recent W-4. If the numbers drift, update your W-4 or ask payroll to reconcile the benefits election. If you suspect your employer is withholding payroll taxes but not sending them to the IRS, you can verify by checking your wage and income transcript in your IRS online account. The consequences on the employer’s side are steep: federal law imposes a penalty equal to 100% of the unpaid tax on any person responsible for withholding who willfully fails to remit it, and that penalty can be assessed personally against owners, officers, and payroll managers.¹⁵

1
Office of the Law Revision Counsel. 26 U.S. Code 3402 – Income Tax Collected at Source
2
Internal 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
3
Internal Revenue Service. Withholding Compliance Questions and Answers
4
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
5
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
6
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
7
Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
8
eCFR. 34 CFR 34.20 – Amount To Be Withheld Under Multiple Garnishment Orders
9
Office of the Law Revision Counsel. 26 U.S. Code 125 – Cafeteria Plans
10
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
11
Internal Revenue Service. Notice on Expanded Availability of Health Savings Accounts
12
FSAFEDS. New 2026 Maximum Limit Updates
13
Internal Revenue Service. Roth Account in Your Retirement Plan
14
U.S. Department of Labor. Fact Sheet 21 – Recordkeeping Requirements Under the Fair Labor Standards Act (FLSA)
15
Office of the Law Revision Counsel. 26 U.S. Code 6672 – Failure to Collect and Pay Over Tax