Understanding Your Paystub Taxes & Deductions
When you receive a paycheck from an employer, your net take-home pay is significantly lower than your total gross earnings. Employers are required by law to withhold mandatory payroll taxes and insurance contributions before issuing funds.
Standard Paystub Breakdown
- Federal Income Tax: Progressive tax rate based on IRS tax brackets and your filing status.
- Social Security Tax: Flat 6.2% withholding up to the annual wage base limit.
- Medicare Tax: Flat 1.45% withholding (plus an additional 0.9% for high earners).
- State & Local Taxes: Varies depending on your state of residence (states like Texas or Florida have 0% state income tax).
