The two categories of paycheck deductions

Your paycheck has two types of deductions: taxes (federal income tax, Social Security, Medicare, state income tax) and voluntary deductions (401k, health insurance, dental, vision, etc.). Taxes are required by law. Voluntary deductions depend on your elections.

Step 1: Gross pay

Gross pay is what you earn before anything is taken out. For salaried employees, it's your annual salary divided by your number of pay periods. For hourly workers, it's your hourly rate times hours worked in the period.

Common pay frequencies and periods per year:

Frequency	Periods/year	Annual salary ÷ periods
Weekly	52	$60,000 ÷ 52 = $1,153.85/week
Biweekly	26	$60,000 ÷ 26 = $2,307.69/period
Semi-monthly	24	$60,000 ÷ 24 = $2,500.00/period
Monthly	12	$60,000 ÷ 12 = $5,000.00/month

Step 2: Pre-tax deductions

Some deductions reduce your taxable income before taxes are calculated. The most common:

Traditional 401(k) contributions — reduce federal and state taxable income, but do NOT reduce Social Security or Medicare wages.
Health, dental, and vision insurance under a Section 125 cafeteria plan — reduce federal, state, AND FICA (Social Security + Medicare) wages.
HSA contributions through payroll — same treatment as health insurance (Section 125).
Dependent care FSA — reduces all taxes including FICA.

Roth 401(k) contributions are not pre-tax — they reduce take-home pay but don't lower your tax withholding.

Step 3: Federal income tax withholding

The IRS-approved method (Publication 15-T, "Percentage Method") works like this:

Take your taxable wages per period (after pre-tax deductions).
Multiply by your pay periods per year to annualize.
Subtract your annual standard deduction based on filing status.
Apply the 2026 federal tax brackets to the result.
Divide by pay periods to get per-paycheck withholding.
Add any flat additional withholding from W-4 line 4c.

The 2026 standard deductions are:

Single / Married filing separately: $15,000
Married filing jointly: $30,000
Head of household: $22,500

Step 4: Social Security and Medicare (FICA)

Social Security: 6.2% on wages up to $176,100 in 2026. Once you reach the wage base mid-year, Social Security withholding stops until January 1.

Medicare: 1.45% with no cap. An additional 0.9% surtax applies once wages exceed $200,000 (single) or $250,000 (married) — employers withhold this starting from the paycheck where you cross that threshold without knowing your spouse's income, so you may owe more at tax time if you file jointly.

FICA is calculated on gross wages minus Section 125 deductions. Traditional 401(k) does not reduce FICA.

Step 5: State income tax

State income tax varies dramatically by state:

9 states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
15+ states have flat rates ranging from 2.5% (Arizona) to 5.8% (Idaho)
26 states have progressive brackets from under 5% (Ohio, North Dakota) to over 9% (California, Minnesota, Oregon, New Jersey, New York)

Use the state calculator for your state to see exact withholding.

Why does my actual withholding differ from the estimate?

Several factors can cause your actual withholding to differ:

W-4 extra withholding (line 4c): Any flat additional withholding amount you elected.
Multiple jobs: If you have two jobs, each employer withholds as if it's your only income. The total may be under-withheld — use the IRS Withholding Estimator to adjust.
Bonus withholding: Bonuses may be withheld at a flat 22% (supplemental wage rate) rather than your marginal rate.
Mid-year start: If you started a new job mid-year, the annualization method may over-withhold for the remainder of the year.
State-specific rules: Some states have different annualization methods, different allowances, or local taxes.

The W-4 and how it affects withholding

The 2020 redesigned W-4 no longer uses "allowances." Instead it has five steps:

Personal information and filing status
Multiple jobs or spouse works (most common cause of under-withholding)
Claim dependents (reduces withholding)
Other adjustments (deductions, other income, extra withholding)
Signature

If you only complete Steps 1 and 5, withholding is calculated as if you are Single with no other adjustments. Read the full W-4 guide for details.

Try the calculator

Select your state from the list below and use the calculator to see a full breakdown of every withholding on your paycheck:

Last updated: January 2026 · Sources: IRS Publication 15-T (2026), IRS Rev. Proc. 2025-28

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