What Taxes Are Taken out of My Paycheck?

Receiving your paycheck can be the best feeling in the world, but that feeling can sometimes be hampered once you see the amount of deductions that have been taken out. Understanding why these deductions exist – and how much they will be – can make it easier to budget and prepare for each month through taking some of the guesswork out of your paycheck each pay period.

First, it’s important to understand the difference between gross pay and net pay. Your gross pay is the total amount that you are being paid, before taxes and other deductions are taken out. Your net pay is the amount that you actually receive in your bank account each pay period. It denotes the amount of pay after taxes and other deductions.

Most of the deductions are for taxes, but there may also other various deductions according to various benefits offered by your employer; we will explain each of these potential deductions in more detail below, but let’s start with the main deductions. So how much tax is deducted from a paycheck? And what percentage of your paycheck goes to taxes? Let’s break it down.

Deductions for Taxes

As mentioned, the bulk of the deductions taken out of every paycheck go towards taxes – and these are the deductions that are pretty much guaranteed for everyone. If you are a freelancer or private contractor, you may be responsible for calculating and deducting these yourself, but they will still apply in almost all cases Here is a breakdown of the various taxes taken out of a paycheck.

Federal Income Taxes

The federal income tax withholding is exactly what it sounds like – a federal tax that is a certain amount deducted from your pay in order to pay for various nationwide expenses. This amount will vary based on a few factors: your salary, your filing status, and the number of exemptions you claim. In order to know how much this deduction will be, you can use a withholding calculator.

State and Local Taxes

As well as federal taxes, there may also be state and local taxes withheld. State refers to taxes withheld for state expenses, and local tax is for the county or municipality in which you live. Again, the amount withheld will vary according to your personal situation. But in addition to that, in this case it may also differ according to where you live; some states do not even have an income tax at all.

Social Security

You may be aware of, or have seen FICA on your pay stub, and wondered what it means. FICA stands for Federal Insurance Contributions Act, and refers to the contributions to social security that are taken out of every paycheck. The exact percentage that is removed fluctuates, but for the year 2019 it stands at 6.2% across the board.

Medicare

As well as social security, there are also deductions which contribute to Medicare. This is a flat rate of 1.45% of your paycheck.

Other Deductions

Now that you know how much of your paycheck goes to taxes, it is important to be aware that those may not be the only deductions that are withheld from your regular paycheck. Here are a few of the deductions that you may see on your paycheck outside of taxes.

Insurance

First, if you have a job which provides you with insurance through a health plan which requires you to contribute a certain amount to the monthly premium, that is something that you should see reflected regularly in your pay stubs. This could include health insurance, life insurance, or any other kind of insurance offered by your employer; so if you have any of these you will see deductions associated with each one.

Retirement Plans

As with insurance, you may have a retirement plan that is offered by your employer. If so, it is common for a certain amount to be deducted each month or other given period to contribute to that plan, which is often matched by employers. This will likely show up on your pay stub as “401(k)” or something similar.

Health Savings Account

One final perk that you may have is a health savings account, or HSA. this is an account that allows you to set aside money pre-tax to pay for various healthcare expenses. If you have an HSA and have committed to contributing a certain amount, you will see this reflected on your pay stub.

Frequently Asked Questions

Now that you have a breakdown of the various deductions on your paychecks, you may have some follow-up questions. Here are a few of the most commonly asked questions regarding paycheck deductions.

Why do I get taxed so much on my paycheck?

The amount of money deducted from each paycheck for income taxes is dependent on a number of factors which are combined to determine which tax bracket you belong in. It can also be affected by how many exemptions you claim. If you feel that you are being taxed too much on your paycheck, it may be because you are not claiming the right number of exemptions. Remember that if you claim too many, you could end up paying more taxes when tax season comes around.

How do you calculate take home pay?

So when it comes down to it, this is what really matters – how much “take home” pay do you have each pay period? That is to say, how much of your paycheck actually goes in your pocket each month – how much do you “take home?” As mentioned, there is a difference between how much a company pays you – your gross pay, and how much you actually receive – your net pay.

In order to calculate take home pay, you need to figure out how much your net pay will be after deductions. You can do this using a withholding calculator to work out tax deductions, and then applying further deductions for insurance and other withholdings.

Alternatively – or additionally – you can also make use of the free calculator when you use CheckStubMaker to create pay stubs. Our easy tool provides all of the necessary fields for deductions, and will do the math for you, leaving you with your take home net pay.

How much does Medicare take out of your paycheck?

Medicare takes 1.45% of your salary out of your paycheck.


With all of this in mind, it is easy to see how managing payroll, or creating your own pay stubs, can quickly become overwhelming – especially if you are not confident when it comes to math. That is why CheckStubMaker aims to take away that headache through providing a simple tool to create your own pay stubs easily – and taking care of all of the necessary math for you. Get started using our tool today, and have your pay stubs, complete with all deductions, in minutes.

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