Understanding Your Paycheck: What Gets Deducted and Why
Every time you receive a paycheck, your employer withholds several categories of taxes before the money reaches your bank account. Knowing what each line item means — and how it's calculated — helps you budget accurately and spot errors on your pay stub.
Federal Income Tax: The Largest Deduction for Most Workers
Federal income tax is calculated using progressive brackets. For 2024, rates range from 10% on the first $11,600 of taxable income (for single filers) up to 37% on income over $609,350. Only the income within each bracket is taxed at that bracket's rate — a common misconception is that a raise can cost you money by pushing all your income into a higher bracket. That's never true. The 2024 standard deduction of $14,600 (single) or $29,200 (married) is subtracted from your gross income before these brackets apply.
State Income Tax: Huge Variation Across the Country
State income tax is one of the most significant variables in your paycheck. Nine states — including Texas, Florida, and Washington — have no state income tax at all. At the other extreme, California's top marginal rate reaches 13.3%, and New York City residents pay both state and city taxes. Our salary paycheck calculator accounts for every state's current brackets and deductions automatically. If you're considering a job in a different state, use the tax withholding calculator to compare your after-tax income side by side.
FICA Taxes: Social Security and Medicare
FICA taxes are flat rates that apply to nearly every worker regardless of filing status. Social Security is 6.2% on wages up to $168,600 in 2024 — once you hit that limit mid-year, this deduction stops completely. Medicare is 1.45% on all wages, with an extra 0.9% surcharge on wages above $200,000. Unlike income tax, you can't reduce FICA by contributing to a 401(k) or taking deductions. Workers earning hourly wages can use our hourly paycheck calculator to see exactly how FICA affects different workweek scenarios.
Pre-Tax Deductions: Your Best Tool to Reduce Taxes
Contributing to a 401(k), traditional IRA, HSA, or employer-sponsored health insurance reduces your federally taxable income dollar-for-dollar. A worker earning $75,000 who contributes $7,500 annually to a 401(k) is only taxed on $67,500 for federal income tax purposes (before the standard deduction). Over a full year, this typically saves $1,500–$2,500 in federal taxes alone, depending on filing status. If you've recently received extra pay, our bonus tax calculator shows how contributing a bonus to your 401(k) can dramatically reduce the tax hit. For hourly workers picking up extra shifts, the overtime pay calculator shows your true overtime take-home after all deductions.
A Real Example: $75,000 Salary in New York
A single filer in New York earning $75,000 annually takes home approximately $54,800 per year — about 73% of gross pay. Federal income tax accounts for roughly $9,200 (after the $14,600 standard deduction), New York state tax adds about $3,800, and FICA takes another $5,738. The biweekly paycheck calculator would show this as approximately $2,108 per check for someone paid every two weeks. The same salary in Texas would yield about $57,600 take-home — a $2,800 annual difference purely from state tax.