What Taxes Are Deducted From a Paycheck?
By Onoir Studio LimitedPublished Source links reviewed
A U.S. paycheck commonly includes federal income tax, Social Security, and Medicare withholding. State, city, county, disability, or paid-leave deductions may also apply, depending on where the employee works and the governing rules.
Key takeaways
- Federal income tax withholding is separate from FICA payroll taxes.
- In 2026, the employee Social Security rate is 6.2% up to $184,500 and the ordinary employee Medicare rate is 1.45% with no wage-base limit.
- State and local deductions depend on jurisdiction, work location, residency, and individual circumstances.
- Health insurance and retirement deductions affect net pay but are not themselves taxes.
Common paycheck tax lines
| Line | What it generally represents | Always present? |
|---|---|---|
| FIT or federal withholding | Prepayment of federal income tax based on taxable wages and Form W-4 | No; a calculation can produce zero |
| Social Security or OASDI | Employee FICA tax, 6.2% on covered wages up to the 2026 base | Most covered employment, with exceptions |
| Medicare | Employee FICA tax, ordinarily 1.45% on covered wages | Most covered employment, with exceptions |
| State income tax | State withholding under the state’s rules and employee certificate | No; some states have no broad wage income tax |
| Local income tax | City, county, school-district, or other local withholding | Only where applicable |
| State program contribution | Employee funding for disability, paid leave, or unemployment programs in certain states | Varies by state and coverage |
Federal income tax withholding
Federal income tax withholding does not use one universal paycheck percentage. Employers generally use IRS methods with taxable wages, pay frequency, and a valid Form W-4. Credits, multiple jobs, other income, deductions, and requested extra withholding can change the result. The amount is credited toward federal tax when the employee files an annual return.
A refund or balance due depends on the complete return, not one paycheck line. Someone with zero federal withholding can still owe tax, while someone with substantial withholding can receive a refund.
Social Security and Medicare
For covered wages in 2026, employers generally withhold 6.2% for Social Security until that employer’s wages reach $184,500, plus 1.45% for Medicare without a wage-base cap. Employers generally match those ordinary employee amounts, but the employer share does not reduce the employee’s net check.
An employer must also begin withholding 0.9% Additional Medicare Tax when wages it pays an employee exceed $200,000 in a calendar year. The employee’s final Additional Medicare liability is reconciled on the tax return and uses filing-status thresholds, which can produce a different result from employer withholding.
Illustrative deduction breakdown
This example shows how categories fit together. Only the Social Security and ordinary Medicare figures below are calculated using verified 2026 federal rates; other values are hypothetical.
| Item on $2,000 covered gross | Illustrative amount | Category |
|---|---|---|
| Federal income tax | $180 | Tax withholding, hypothetical |
| Social Security | $124 | $2,000 × 6.2% |
| Medicare | $29 | $2,000 × 1.45% |
| State income tax | $60 | Tax withholding, hypothetical |
| Health insurance | $100 | Benefit deduction, not a tax |
| Retirement contribution | $100 | Employee savings, not a tax |
| Illustrative net pay | $1,407 | Gross less listed amounts |
Taxes employers usually pay separately
Federal unemployment tax, known as FUTA, is generally an employer tax and should not ordinarily appear as an employee deduction. Employers also pay their own Social Security and Medicare shares. State unemployment financing varies; some states require an employee contribution, so a line involving unemployment should be checked against that state’s official rule rather than judged from the label alone.
To review a stub, distinguish taxes from benefits and post-tax deductions, then identify the taxable wage base for each tax. Gross pay can differ from federal income tax wages, Social Security wages, Medicare wages, and state wages.
Where this comes from
- IRS Publication 15 (2026), Employer’s Tax Guide (opens in a new tab)
- IRS Topic 751, Social Security and Medicare Withholding (opens in a new tab)
- IRS Tax Withholding Overview (opens in a new tab)
- U.S. Department of Labor, State Labor Office Contacts (opens in a new tab)
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