If you’re wondering why so much is taken out of your paycheck, the short answer is that three federal deductions (income tax, Social Security, and Medicare) usually claim about 20% to 25% of gross pay on their own, and that’s before state tax, health insurance premiums, retirement contributions, and any other benefits come out. Each line on your pay stub has its own rule, and once you can name what each one is, the gap between your salary and your deposit stops feeling arbitrary.
Federal Income Tax Is Usually the Biggest Bite
Federal law requires your employer to withhold income tax from every paycheck and send it to the IRS on your behalf.1Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source How much comes out depends on what you told your employer on IRS Form W-4: your filing status, whether you hold more than one job, and any adjustments for dependents or other income.2Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate Your employer runs that information through IRS withholding tables in Publication 15-T to figure out the dollar amount for each pay period.3Internal Revenue Service. About Publication 15-T, Federal Income Tax Withholding Methods
The system is progressive, so your income is taxed in layers. For 2026 there are seven brackets running from 10% on the first slice of income up to 37% on income above $640,600 for a single filer.4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 If you earn $60,000 as a single filer, you don’t pay 22% on all of it. The first $12,400 is taxed at 10%, the next chunk at 12%, and only the portion above $50,400 is taxed at 22%. Your effective rate ends up well below your top bracket.
The standard deduction shrinks the amount that’s taxable in the first place. For 2026 it’s $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for head of household.4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 The single filer at $60,000 really owes income tax on about $43,900 once the standard deduction is applied. Withholding tries to spread that annual bill evenly across your paychecks so nothing lands as a surprise in April.
Social Security and Medicare Take a Flat 7.65%
Two payroll taxes fund Social Security and Medicare and apply no matter what your W-4 says. You pay 6.2% of gross wages toward Social Security and 1.45% toward Medicare, a combined 7.65%. Your employer matches that on top, though the match never appears on your stub.5Social Security Administration. What is FICA?
Social Security tax stops at an annual wage cap. For 2026 that cap is $184,500.6Social Security Administration. Contribution and Benefit Base Once your year-to-date wages cross it, the 6.2% deduction turns off and your paychecks get bigger for the rest of the year. If you’ve ever noticed a bump in your November or December checks, this is why.
Medicare has no cap. Every dollar you earn is subject to the 1.45%. High earners pay an Additional Medicare Tax of 0.9% on wages above $200,000 for single filers or $250,000 for married joint filers.7Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Your employer begins withholding the extra 0.9% once you cross $200,000, regardless of filing status; if your real threshold is $250,000, the difference is trued up on your return.8Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
State and Local Taxes Depend on Where You Live
Most states levy their own income tax. Some use a single flat rate, some copy the federal progressive structure, and a handful charge nothing at all. Two people earning identical salaries can bring home visibly different amounts based only on geography.
Local taxes can stack on top. Some cities, counties, and school districts run their own payroll taxes and collect them through the same employer withholding process. Individually they tend to be small, but they add up. An unfamiliar line on your stub that doesn’t match any federal program is almost always a local tax. Your employer is responsible for tracking and remitting the right amount to each authority, though watching those lines yourself is a reasonable habit.
Health Insurance and Pre-Tax Benefit Deductions
For most people with employer coverage, the health insurance premium is one of the largest voluntary deductions on the stub. Your share generally comes out under a Section 125 cafeteria plan, meaning it’s subtracted from gross pay before federal income tax, Social Security, and Medicare are calculated. A $200 premium doesn’t cost $200 in take-home pay, because it also lowers the taxes those wages would have generated.
Health Savings Accounts and Flexible Spending Accounts work the same way. HSA contributions run through payroll are pre-tax for income tax and FICA. For 2026 the HSA limit is $4,400 with self-only coverage and $8,750 with family coverage.9IRS.gov. Expanded Availability of Health Savings Accounts Under the One, Big, Beautiful Bill Act Health care FSAs cap at $3,400 for 2026, and dependent care FSAs allow up to $7,500 for joint filers.10FSAFEDS. Dependent Care FSA These accounts trim your taxable wages dollar for dollar, so a big-looking deduction is partly paying for itself.
Employer-provided group life insurance has a quirk worth knowing. Coverage up to $50,000 is tax-free. If your employer provides more, the cost of the excess coverage is added back to your taxable income as “imputed income,” and you’ll see a small tax hit even though no cash actually moved.11Internal Revenue Service. Group-Term Life Insurance
Retirement Contributions Are Yours, But They Still Reduce Your Check
Traditional 401(k) and 403(b) contributions come out before federal income tax is figured. For 2026 the limit is $24,500. Workers age 50 and up can add $8,000 in catch-up contributions (total $32,500), and those aged 60 through 63 get a higher $11,250 catch-up, up to $35,750.12Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026
One detail trips people up. Traditional 401(k) contributions cut your federal income tax now, but not your Social Security or Medicare tax; you still pay the full 7.65% FICA on that money. A Roth 401(k) is the reverse: taxed now at your full rate, tax-free in retirement. Either way these deductions can visibly shrink each check, especially if you’re saving aggressively or your employer auto-enrolled you at a default rate you never chose.
Other Line Items That Catch People Off Guard
In several states, employees pay into a state disability insurance or paid family leave fund through payroll. Rates run roughly 0.5% to 1.3% of wages depending on the state. Not every state has one, but where it exists it’s mandatory and shows up every pay period.
Commuter and parking benefits are a voluntary pre-tax deduction some employers offer. For 2026 you can set aside up to $340 per month for transit passes and up to $340 per month for qualified parking.13Internal Revenue Service. Employer’s Tax Guide to Fringe Benefits Like health premiums, these lower taxable wages, so the net cost is less than the face value.
When a Court Order Is Taking Part of Your Pay
If a deduction on your stub isn’t tax and isn’t a benefit, a garnishment is a real possibility. When a creditor obtains a court judgment, your employer can be ordered to withhold part of your pay and send it directly to the creditor. Unpaid child support, defaulted student loans, and tax debts are the most common reasons. Once the order is served, your employer has to comply.
Federal law caps garnishment for ordinary consumer debts at the lesser of 25% of your disposable earnings for the week or the amount by which your weekly disposable earnings exceed 30 times the federal minimum wage ($7.25 per hour, or $217.50 per week).14Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment The second test protects low-wage workers: below $217.50 per week in disposable income, consumer-debt garnishment generally can’t touch your wages.
Child support and alimony run on a different scale. Up to 50% of disposable earnings can be withheld if you’re supporting another spouse or child beyond the one on the order, or up to 60% if you’re not. Being more than 12 weeks behind pushes each cap up by an additional 5%.15U.S. Department of Labor. Fact Sheet #30: Wage Garnishment Protections of the Consumer Credit Protection Act Defaulted federal student loans have their own rule: up to 15% of disposable pay, taken through an administrative process that doesn’t require going to court, though you can request a hearing within 30 days of receiving notice.16Office of the Law Revision Counsel. 20 USC 1095a – Wage Garnishment Requirement
How to Check Whether Too Much Is Really Coming Out
A consistently large refund means you’re lending the government money interest-free all year. Owing a big balance every April can trigger an underpayment penalty on top of the tax bill; the IRS charges interest on underpayments at 7% annually as of early 2026.17Internal Revenue Service. Quarterly Interest Rates You generally avoid the penalty if your total withholding and estimated payments cover at least 90% of what you owe this year, or 100% of what you owed last year (110% if your adjusted gross income was above $150,000).18Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty You also avoid it if you owe under $1,000 at filing.
The IRS Tax Withholding Estimator is free. It walks you through income, deductions, and credits, then tells you whether your current W-4 settings will leave you owing or getting a refund. It can even generate a pre-filled W-4 to hand to your employer.19Internal Revenue Service. Tax Withholding Estimator Running it once a year, and again after a job change, marriage, or new child, keeps the withholding roughly right.
You can submit a new W-4 to your employer at any time, as often as you want. If your situation changes midyear, updating sooner gives the remaining paychecks more room to correct course. Waiting until November to fix a problem that started in January rarely works out cleanly.