Withholdings on a paycheck are the amounts your employer subtracts from your gross pay before depositing the rest into your bank account. Between federal income tax, Social Security, Medicare, and any state or local taxes, a typical employee loses roughly 25% to 35% of gross earnings before factoring in voluntary deductions like health insurance or retirement contributions. Every line item on your pay stub traces back to either a tax law or a benefit you elected.
Federal Income Tax
Federal income tax is the largest withholding for most workers. Every employer paying wages must deduct a portion and send it to the IRS on your behalf throughout the year.1Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source The amount depends on how much you earn, your filing status, and the information you provide on Form W-4, the Employee’s Withholding Certificate.2Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate
When you start a new job, your employer asks you to complete a W-4. You indicate your filing status (single, married filing jointly, or head of household), claim credits for dependents, and note any additional income or deductions that affect your tax picture. Your employer runs those details through the current IRS withholding tables to calculate the dollar amount pulled from each paycheck. You can update your W-4 anytime.
If you never turn in a W-4, your employer doesn’t guess. The IRS requires them to withhold as if you’re single with no adjustments, which pulls more tax than most people actually owe.3Internal Revenue Service. Withholding Compliance Questions and Answers Some workers can skip federal income tax withholding entirely. To claim that exemption for 2026, you must have owed zero federal income tax in 2025 and expect to owe zero again in 2026. Claiming it means no federal income tax comes out of your paychecks, but you’ll need to submit a fresh W-4 by February 16, 2027, to maintain or change that status.4Internal Revenue Service. Form W-4 (2026) Employee’s Withholding Certificate
Social Security and Medicare
The second major chunk of your withholdings goes to Social Security and Medicare, collectively known as FICA taxes after the Federal Insurance Contributions Act. These aren’t optional, and no form changes the rate. The percentages are fixed by statute.
Social Security takes 6.2% of your gross wages, and your employer pays a matching 6.2% on top of that, so 12.4% goes into the Social Security trust fund for every dollar you earn up to the annual wage base.5Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates For 2026, that wage base is $184,500. Once your earnings for the year cross that threshold, the 6.2% withholding stops for the rest of the calendar year.6Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet A slightly larger paycheck late in the year is often the reason.
Medicare works the same way at the base level, 1.45% from you and 1.45% from your employer, but there’s no cap on earnings subject to the tax.5Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates High earners face an additional 0.9% Medicare surtax. Employers must start withholding this extra amount once your wages exceed $200,000 in a calendar year, regardless of your filing status.7Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Your actual liability depends on how you file: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for single, head of household, and qualifying surviving spouse.8Internal Revenue Service. Topic No. 560, Additional Medicare Tax
State and Local Taxes
Where you live and work often determines whether your paycheck takes another hit. Most states impose their own income tax, with rates ranging from flat percentages under 3% to progressive brackets that climb above 10% for the highest earners. Eight states levy no individual income tax at all, which gives their residents a bigger take-home pay for the same gross salary.
State income tax withholding works much like the federal version. Your employer calculates the deduction based on state-specific forms and tax tables, then sends the money to the state revenue department. If you live in one state and commute to another, you could see withholdings for both, though most states offer credits to prevent true double taxation.
Beyond income tax, a growing number of states require withholding for disability insurance or paid family and medical leave programs. About a dozen states and the District of Columbia run these programs, and the employee-paid portion shows up as a separate line item on your pay stub. Some cities and counties also impose local income or payroll taxes, funded the same way through payroll deductions your employer manages.
Pre-Tax vs. Post-Tax Deductions
Not all deductions hit your paycheck the same way. The distinction between pre-tax and post-tax deductions has a real effect on how much income tax you pay, and it explains why your withholding amount can shift when you change benefits.
Pre-tax deductions come out of your pay before federal income tax (and usually Social Security and Medicare taxes) is calculated. Common examples include traditional 401(k) contributions, health insurance premiums, Health Savings Account deposits, and flexible spending account contributions. Because these reduce your taxable income, each dollar you route into a pre-tax benefit lowers the income tax withholding on that paycheck. A worker earning $60,000 who contributes $6,000 pre-tax to a 401(k) gets taxed as if they earned $54,000. The savings show up immediately in every pay period.
Post-tax deductions come out after taxes are calculated, so they don’t reduce your current tax bill. Roth 401(k) contributions, certain life insurance premiums, and some disability insurance policies fall into this category. The trade-off varies by benefit. Roth contributions are taxed now but grow and withdraw tax-free in retirement, while life insurance premiums are simply a post-tax expense with no future tax benefit.
Voluntary Deductions You Elected
Everything above is mandatory. The government takes it whether you want it to or not. But many paycheck deductions are ones you opted into, typically during hiring or open enrollment.
Retirement Contributions
The most impactful voluntary deduction for most workers is a retirement plan contribution. For 2026, the IRS allows employees to defer up to $24,500 into a 401(k) or 403(b) plan. Workers aged 50 and older can add up to $8,000 in catch-up contributions, for a total of $32,500. An even higher catch-up limit of $11,250 applies to participants aged 60 through 63, pushing their maximum to $35,750.9Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Many employers match a percentage of your contribution, which doesn’t come out of your paycheck at all.
Health Insurance and Related Accounts
Health, dental, and vision insurance premiums are among the most common payroll deductions. Most employer-sponsored health insurance premiums are deducted pre-tax, which softens the blow of what can be a substantial monthly cost.
If you’re enrolled in a high-deductible health plan, you can also contribute to a Health Savings Account. For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage.10IRS. Expanded Availability of Health Savings Accounts Under the One, Big, Beautiful Bill Act HSA contributions are pre-tax, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free.
Health care flexible spending accounts let you set aside pre-tax dollars for medical expenses not covered by insurance, with a 2026 limit of $3,400. Dependent care FSAs, which cover childcare costs, allow up to $7,500 per household for 2026. Most FSA funds follow a “use it or lose it” rule. Unspent balances at year-end are forfeited unless your plan offers a grace period or limited carryover.
Other Voluntary Items
Employer-sponsored life insurance, short-term and long-term disability insurance, legal services plans, commuter benefits, and union dues can all appear as payroll deductions. Once you authorize these during enrollment, the amounts are deducted automatically each pay period and sent to the appropriate provider.
Wage Garnishments
Some deductions arrive uninvited. Wage garnishments are court-ordered or agency-ordered withholdings that direct your employer to send part of your pay to a creditor. Your employer has no choice but to comply.
For ordinary consumer debts like credit card judgments and medical bills, the Consumer Credit Protection Act caps garnishment at the lesser of 25% of your disposable earnings or the amount by which your weekly pay exceeds 30 times the federal minimum wage.11eCFR. 29 CFR Part 870 – Restriction on Garnishment “Disposable earnings” means what’s left after legally required deductions like taxes and Social Security, not your gross pay.
Child support and alimony garnishments follow steeper limits. If you’re supporting another spouse or child, up to 50% of your disposable earnings can be garnished for support. If you’re not, that ceiling rises to 60%. Either figure jumps another 5 percentage points if your payments are more than 12 weeks overdue.12U.S. Department of Labor. Fact Sheet #30: Wage Garnishment Protections of the Consumer Credit Protection Act
Federal student loans in default can be garnished through an administrative process, no court order required. The loan holder can take up to 15% of your disposable pay until the debt is resolved.13Federal Student Aid. What Is Wage Garnishment? IRS tax levies have their own formula and can take a significant portion of your paycheck, with the protected amount based on your filing status and number of dependents.
Checking Your Withholding
Most people set up their W-4 on their first day at a new job and never look at it again. That’s how you end up either writing a large check to the IRS in April or celebrating a big refund that was really an interest-free loan to the government.
The IRS offers a free Tax Withholding Estimator at irs.gov that walks you through your income, deductions, and credits, then tells you whether your current withholding is on track.14Internal Revenue Service. Tax Withholding Estimator It can even generate a pre-filled W-4 for you to hand to your employer. Running through it takes about 15 minutes.
Certain life events should trigger an immediate W-4 review: getting married or divorced, having a child, buying a home, starting a side job, or a spouse entering or leaving the workforce. Each of these changes your tax situation enough that last year’s withholding settings may leave you significantly over- or under-withheld.