What Is Taken Out of Your Paycheck: Taxes, Benefits, and Garnishments

Every paycheck arrives smaller than your gross pay because several things come out first: federal income tax, Social Security and Medicare (together called FICA), state and often local income taxes, any benefit contributions you signed up for through your employer, and, if a court has ordered it, wage garnishments. What is taken out of your paycheck depends partly on federal rules that apply to everyone and partly on choices you made when you filled out your W-4 and your benefits enrollment.

Federal Income Tax

Your employer is required to withhold federal income tax from your wages and send it to the IRS.¹ How much depends on the Form W-4 you turned in when you started the job. That form captures your filing status, whether you or your spouse have multiple jobs, the dollar value of any dependent credits, and any additional amount you want withheld.² If you leave the optional sections blank, withholding defaults to the standard deduction for your filing status.

Federal tax is progressive. There are seven brackets, and each rate applies only to the slice of income that falls inside its band. For a 2026 single filer, the lowest slice of income is taxed at 10% and the highest slice, above $640,600, is taxed at 37%; married couples filing jointly hit the top 37% rate only above $768,700.³ Someone earning $60,000 does not pay 22% on the whole amount; the earlier dollars are taxed at 10% and 12%, and only income above $50,400 reaches the 22% band.

You can submit a new W-4 at any time. The IRS suggests reviewing your withholding after marriage or divorce, the birth or adoption of a child, buying a home, retiring, or picking up or losing a second job, because any of those can shift what you actually owe.⁴

Social Security and Medicare

FICA is a separate deduction from income tax, and the rates are fixed by law. You pay 6.2% of your wages toward Social Security and 1.45% toward Medicare, for a combined 7.65% on most paychecks. Your employer pays an equal amount on its side.⁵

Social Security only applies up to an annual wage base, which is $184,500 for 2026.⁶ Once your year-to-date wages cross that line, Social Security tax stops for the rest of the year and your paychecks get slightly larger. Medicare has no cap; every dollar you earn is subject to the 1.45%.

High earners owe an extra 0.9% Medicare tax on wages above $200,000 in a calendar year ($250,000 for married filing jointly).⁷ Employers start withholding the additional 0.9% once your wages pass $200,000, regardless of filing status, and there is no employer match on this piece.⁸

State and Local Taxes

Most states levy their own income tax on wages. Some use a flat rate, some use brackets like the federal system, and a handful impose no state income tax at all. Your employer withholds state tax based on either a state withholding form or the information from your federal W-4.

If you live in one state and work in another, both could try to tax the same wages. Many neighboring states have reciprocal agreements that solve this by having the employer withhold only for your state of residence. Where no agreement exists, you generally file returns in both states and claim a credit at home for tax paid to the work state.

Some cities, counties, and school districts add their own income or payroll tax, usually under 2%. Several states also require employees to help fund state disability insurance or paid family leave, with contribution rates roughly between 0.2% and 1.3% of wages depending on the state and program.

Benefit Deductions You Signed Up For

Anything you elected during benefits enrollment shows up on your pay stub too. These deductions divide into pre-tax and post-tax, and the label matters because pre-tax amounts come out before income tax and FICA are calculated, lowering the wages those taxes are applied to.

Pre-Tax

Common pre-tax deductions include health, dental, and vision premiums run through a Section 125 cafeteria plan⁹; traditional 401(k) or 403(b) contributions; health flexible spending account (FSA) contributions; and health savings account (HSA) contributions if you have a qualifying high-deductible plan.

For 2026, you can defer up to $24,500 into a 401(k) or 403(b). Workers age 50 and older can add an $8,000 catch-up, and those age 60 through 63 can add $11,250 instead.¹⁰¹¹ The 2026 health FSA limit is $3,400.³ HSA limits for 2026 are $4,400 for self-only coverage and $8,750 for family coverage, and unused HSA balances carry over year to year, unlike an FSA.¹²

A pre-tax contribution reduces both your federal income tax and the wages subject to the 7.65% FICA, so the take-home cost of contributing is less than the dollar amount deducted.

Post-Tax

Some benefits come out after taxes are calculated. Roth 401(k) contributions are the main example: you pay tax on the money now, and qualified withdrawals in retirement are tax-free. Group life insurance premiums for coverage above $50,000, long-term disability insurance, and union dues also typically come out post-tax.

Garnishments if You Owe a Debt

A court or government agency can order your employer to hold back part of your wages and pay a creditor directly. You cannot opt out, and neither can your employer.

For most consumer debts, such as a credit card judgment or a medical bill, federal law caps the garnishment at the lesser of 25% of your disposable earnings or the amount by which your weekly earnings exceed 30 times the federal minimum wage.¹³ Disposable earnings means pay after legally required deductions like taxes and FICA; voluntary deductions such as your 401(k) do not reduce the base.

Child support and alimony orders allow more:

50% of disposable earnings if you are supporting another spouse or child
55% in that situation if you are more than 12 weeks behind
60% if you are not supporting another spouse or child
65% in that situation if you are more than 12 weeks behind

These limits are set by federal law.¹³ Defaulted federal student loans have their own rule: the Department of Education can garnish up to 15% of disposable earnings without a court order.¹⁴ Unpaid federal and state taxes are not subject to the 25% consumer cap; the IRS sets its own amount based on your filing status and dependents. Some states also let employers charge a small per-pay-period fee for processing the order.

Making Sure Enough Is Coming Out

If too little is withheld, the IRS may charge an underpayment penalty when you file. You are generally exposed to a penalty if you owe at least $1,000 after withholding and refundable credits.¹⁵

You avoid the penalty if your withholding and any estimated payments cover the lesser of 90% of the current year’s tax or 100% of last year’s tax. If last year’s adjusted gross income was over $150,000 ($75,000 if married filing separately), the prior-year figure rises to 110%.¹⁵ The most common reason people fall short is a mid-year change like a second job, a working spouse’s income, or investment gains without a fresh W-4 to match. The IRS offers a free Tax Withholding Estimator to check whether your current setup is on track.⁴

1
Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source
2
Internal Revenue Service. Form W-4 Employee’s Withholding Certificate
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
4
Internal Revenue Service. Tax Withholding
5
Office of the Law Revision Counsel. 26 USC Ch 21 – Federal Insurance Contributions Act
6
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
7
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
8
Internal Revenue Service. Topic No 560 Additional Medicare Tax
9
Office of the Law Revision Counsel. 26 USC 125 – Cafeteria Plans
10
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
11
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026
12
Internal Revenue Service. IRS Notice 2026-05 – HSA Contribution Limits
13
Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
14
U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
15
Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals