Types of taxes withheld from every paycheck
There are typically three types of taxes withheld from your paycheck:
- Federal income tax: Federal income tax is variable. It depends on how much you earn, your filing status, and the choices you made on your W-4.
- FICA (Federal Insurance Contributions Act) is fixed at 7.65% of wages for almost everyone: 6.2% for Social Security and 1.45% for Medicare, regardless of your filing status or how you filled out your W-4.
- State income tax: If your state collects income tax, it will also be taken out of your paycheck. Each state independently decides whether it charges income taxes, and the rates vary. Check with your state tax authority to confirm whether you’re obligated to pay state income taxes.
How your Form W-4 controls federal income tax withholding
Your employer uses Form W-4 to figure out how much federal income tax to hold back from each check. There are three elements of your W-4 that impact your tax withholding the most:
- Your filing status (single, married filing jointly, or head of household).
- How many dependents and credits you claim in Step 3, which reduce withholding, meaning less comes out of your paycheck.
- Any extra flat amount you request in Step 4(c), which increases your withholding, meaning more comes out of your paycheck.
Getting your withholding right is the difference between a big refund or a surprise bill in April.
Social Security and Medicare tax: the fixed 7.65%
Unlike income tax, FICA doesn’t care about your filing status or deductions. It’s the same rate for every employee, up to a cap on the Social Security portion:
| Tax | Rate | Wage base / cap | Employer match |
|---|---|---|---|
| Social Security | 6.2% | First $184,500 of wages | Employer pays a matching 6.2% |
| Medicare | 1.45% | No cap, applies to all wages | Employer pays a matching 1.45% |
| Additional Medicare Tax | 0.9% | Wages above $200,000 (single) or $250,000 (married filing jointly) | No employer match |
Once your year-to-date wages cross $184,500 with a single employer, that employer stops withholding the 6.2% Social Security portion for the rest of the year. The 1.45% Medicare portion keeps going no matter how much you earn.
Marginal tax rate vs. effective tax rate: why the math feels off
Your tax bracket isn’t the percentage of your whole paycheck that goes to taxes. Brackets are marginal, meaning each rate only applies to the slice of income that falls inside that bracket. Say you’re single and land in the 22% bracket. You’re not paying 22% on every dollar you earn; you pay a lower rate on the first portion of your income, and 22% only kicks in on the dollars above that bracket’s threshold.
Add the total tax together and divide by your total income, and you get your effective tax rate, almost always noticeably lower than your marginal bracket. This is also why a raise that bumps you into a higher bracket doesn’t shrink your whole paycheck; it only affects the tax rate on the new, higher slice of income.
Paycheck withholding by salary: a quick example
Here’s roughly how it breaks down for a single filer earning $60,000 a year, paid every two weeks (26 paychecks):
| Item | Amount per paycheck |
|---|---|
| Gross pay | $2,308 |
| FICA (7.65%) | −$177 |
| Federal income tax (approximate, after standard deduction) | −$180 |
| Estimated net pay before state tax | ≈ $1,951 |
These are rounded, illustrative figures for a simple single-filer situation with no state tax—your own numbers will shift with filing status, dependents, pretax deductions like a 401(k), and where you live.
How to adjust your withholding step by step
- Use the IRS Tax Withholding Estimator with a recent pay stub and last year’s return on hand.
- Fill out a new Form W-4 based on what the estimator recommends.
- Submit the new W-4 to your employer’s payroll department, not to the IRS.
- Recheck your withholding after major life changes, such as marriage, divorce, a new job, a second job, or a new dependent.
