The taxes taken out of your paycheck fall into three federal categories that apply almost everywhere: federal income tax withheld at graduated rates from 10% to 37%, Social Security tax at 6.2% on wages up to $184,500 for 2026, and Medicare tax at 1.45% on every dollar you earn. Most workers also see state income tax, and some see local income tax, state disability or paid family leave contributions, and voluntary pre-tax deductions for retirement and health coverage. Each line on your stub follows a specific rule, and several of them you can adjust.
Federal Income Tax
Federal income tax is almost always the largest deduction. The system is progressive, so your income is taxed in layers. Crossing into the 24% bracket doesn’t mean 24% of your salary disappears; you pay 10% on the first layer of income, 12% on the next, and so on until your top dollar lands in whichever bracket applies.1Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source
For tax year 2026, the seven rates start at 10% and top out at 37%. The 10% bracket runs up to $12,400 for single filers and $24,800 for married couples filing jointly. The 37% top bracket kicks in above $640,600 single and $768,700 joint.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 The middle rates (12%, 22%, 24%, 32%, and 35%) cover the wide band in between.
Your payroll system also builds in the standard deduction before it calculates withholding. For 2026 that’s $16,100 single, $32,200 joint, and $24,150 head of household.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 That’s why someone earning $30,000 doesn’t have taxes withheld on the full $30,000.
How much your employer actually withholds depends on the W-4 you submitted when you were hired. Form W-4 tells payroll your filing status, whether you claim dependents for tax credits, and whether you want extra withheld or have other income to account for.3Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate If you never submitted one, your employer withholds as if you were single with no adjustments.4Internal Revenue Service. FAQs on the 2020 Form W-4
All of this is a prepayment against your annual tax bill. Overwithhold and you get a refund. Underwithhold by more than $1,000 without meeting a safe harbor and you can owe a penalty on top of the tax.5Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
Social Security and Medicare
The next two deductions come from the Federal Insurance Contributions Act, and they hit at flat rates.
Social Security tax is 6.2% of your gross wages, matched by another 6.2% from your employer.6Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax For 2026, it only applies to the first $184,500 you earn.7Social Security Administration. Contribution and Benefit Base Once you hit that ceiling, the deduction stops for the rest of the year, and your remaining paychecks get bigger. The maximum an employee can contribute in 2026 is $11,439. If you work two jobs and each employer withholds independently past the cap, you can claim the excess back when you file your return.
Medicare tax is 1.45% on every dollar of wages, with no cap. Your employer matches that too. High earners pay an Additional Medicare Tax of 0.9% on wages above $200,000 for single filers and $250,000 for married filing jointly. Your employer starts withholding the extra 0.9% once your pay crosses $200,000 in a calendar year regardless of your filing status, and any mismatch with your actual threshold sorts out on your return.6Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
One federal tax you might see referenced but won’t find on your stub: federal unemployment tax (FUTA) is paid entirely by your employer and never reduces your wages.8Internal Revenue Service. Federal Unemployment Tax
Why Bonuses Look So Heavily Taxed
If a bonus check came back much smaller than you expected, the reason is a withholding shortcut. The IRS treats bonuses, commissions, and other irregular pay as “supplemental wages,” and employers are allowed to withhold federal income tax at a flat 22% regardless of your actual bracket. Above $1 million in supplemental wages for the year, the rate becomes 37%.9Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
This is a withholding rule, not a special tax rate. Your bonus gets added to your other income on your annual return and taxed at your actual marginal rate. If 22% was too much, the difference comes back as a refund. Social Security and Medicare still apply at the usual rates.
State and Local Income Tax
After federal taxes and FICA, your state and local government may take another cut. How much depends entirely on where you live and where you work.
Eight states impose no individual income tax at all. The rest use either a flat rate or a bracketed system similar to the federal setup, with top rates ranging from under 3% in low-tax states to more than 13% in the highest.
Working across state lines complicates the picture. As a general rule, your employer withholds for the state where the work is performed, while your home state can also tax you as a resident. Some neighboring states have reciprocity agreements that let you owe income tax only to your state of residence. Without one, you may need to file in both states and claim a credit to avoid double taxation.
Some cities and counties add their own income tax or payroll levy on top, usually under 2%, withheld directly by your employer.
State Disability and Paid Family Leave
About a dozen states and the District of Columbia require employee contributions toward state disability insurance or paid family and medical leave. These show up on your stub next to your taxes, though the money funds insurance benefits rather than general government revenue.
Employee rates generally run between 0.2% and 1.3% of wages, with annual caps. The line item may be labeled SDI, TDI, FLI, or PFML depending on the program. States without mandatory employee contributions either fund similar benefits through employer-only taxes or don’t offer the program at all.
Pre-Tax Deductions That Shrink Your Taxable Pay
Not everything subtracted from your paycheck is a tax. Several common deductions come out before federal income tax and, in some cases, FICA are calculated, which lowers what gets withheld.
Traditional 401(k) contributions are the biggest one for most workers. For 2026 you can defer up to $24,500 into a 401(k), 403(b), or similar plan. Workers 50 and older can add an $8,000 catch-up, bringing the total to $32,500. Under a SECURE 2.0 provision, workers aged 60 through 63 get a higher catch-up of $11,250, allowing up to $35,750.10Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Every pre-tax dollar reduces your federal and usually state taxable wages for the year. Roth 401(k) contributions come out after tax, so there’s no immediate break, but qualified withdrawals in retirement are tax-free.
Employer-sponsored health insurance premiums are almost always deducted pre-tax through a Section 125 cafeteria plan, so no federal income tax, Social Security tax, or Medicare tax applies to that portion of your pay. If you’re enrolled in a high-deductible health plan, you can also contribute pre-tax to a Health Savings Account. HSA limits for 2026 are $4,400 for individual coverage and $8,750 for family coverage.11Internal Revenue Service. Expanded Availability of Health Savings Accounts Under the One, Big, Beautiful Bill Act
Wage Garnishments
Some deductions aren’t voluntary. When a court, tax agency, or federal loan servicer orders your employer to withhold part of your pay, your employer has to comply.
For ordinary consumer debts like credit card judgments, federal law caps the 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. Disposable earnings means what’s left after legally required deductions like taxes, not your gross pay.12Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
Child support and alimony follow higher ceilings: up to 50% of disposable earnings if you’re supporting another spouse or child, up to 60% if you’re not, and an additional 5% if you’re more than 12 weeks behind.13U.S. Department of Labor. Wage Garnishment Protections of the Consumer Credit Protection Act (CCPA) IRS levies and federal student loan garnishments follow their own rules and aren’t subject to the standard consumer caps.
How to Check Whether Your Withholding Is Right
The IRS Tax Withholding Estimator at irs.gov is the easiest check. Enter your year-to-date withholding from a recent pay stub, expected annual income, and filing details, and the tool tells you whether you’re on track for a refund, a balance due, or close to even. Running it once a year, or after any major change like a marriage, a new baby, or a job switch, catches problems before April.
If the numbers are off, submit a new W-4 to your employer. You can do this any time, not just at hire. To fix chronic underwithholding, add a dollar amount to the extra-withholding line. To reduce oversized refunds and put more in each paycheck, add credits or deductions on the form.3Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate