Your paycheck and taxes: Understanding federal tax withholding, state and local tax withholding, FICA tax, and more

Paycheck stubs contain a lot of information. They show your pay as well as your federal withholdings and vacation balances.

All paycheck stubs show your:

• Gross pay—the total amount you earned before any items were withheld for the pay + period.
• Net pay—this is your paycheck after taxes and all other withholdings.

What taxes are on your paycheck?

Your pay stub shows your earnings, taxable wages, and payroll deductions. On the stub, you’ll also see a breakdown of these taxes taken out of your paycheck:

• Federal
• State
• Local
• Social Security
• Medicare

When taxes are deducted from your paycheck, they typically go to several places to fund various federal, state, and local government programs and services.

What percent of taxes are taken out of paycheck?

We often get asked these questions when it comes to taxes on paycheck stubs:

• How much tax is taken out of my paycheck?
• Why are there so many different withholdings?
• Why do my paystubs sometimes differ from paycheck to paycheck?

Paycheck taxes are not one-size-fits-all. Each employee will have a different amount taken out, and that amount can even change from paycheck to paycheck.

Follow along as we break down your current paycheck and taxes shown on it and what your paycheck after taxes could look like.

1. Federal tax withholding (Fed Tax, FT, FIT, or FWT)

Federal income tax withholding (FITW or FWT) is the amount that you’ve already paid the federal government. When people ask, “What is FIT on my paycheck?” this is it! When you file your tax return, you’ll get a credit for this amount to apply to any tax you’ll owe the federal government.

What percentage of my paycheck is withheld for federal tax?

Your employer uses information provided on your Form W-4 as well as the amount of your income and how frequently you are paid in order to determine your federal income tax withholding for each paycheck.

If you earn more than usual during a pay period (working overtime or receiving a bonus), the FITW will likely increase. If you earn less (working fewer hours or increasing contributions to your 401(k)), the FITW may decrease.

Your employer sends the federal income tax withholding to the IRS on your behalf. Your goal is to have at least enough FITW during the year to cover your expected federal income tax liability come tax time. The total FITW for the year is reported on your Form W-2 in Box 2.

If you had no federal income tax withheld, see possible reasons why your employer didn’t withhold federal income tax on your paycheck.

If you’re an employer needing to learn how to figure out payroll taxes? Head to Block Advisors for help with your small business.

2. State income tax withholding (St Tax, ST, or SWT)

Depending on where you live, you may have state tax withholdings on your paycheck. In fact, based on your location, you might:

• Have a higher, lower or same income tax withholding. Some states, like the federal income tax rates, use a progressive tax system, where higher earners pay a larger percentage;
• Have a flat income tax rate, meaning everyone pays the same state tax percentage;
• Not have state withholding; or
• Have state withholding for more than one state—the state you live in and the state(s) you work in.

Learn more about state income tax rates by reviewing state income taxes by state.

State tax withholding details

State taxes are withheld from your paycheck to cover the income tax you owe to your state government. If your state has an income tax, your employer will withhold a portion of your earnings each pay period and send it directly to the state. The amount withheld depends on the same factors for federal tax withholdings; your income, filing status, dependents, and exemptions.

Your pay stub will typically show how much has been withheld for state taxes under a line labeled “State Tax” or the abbreviation for your state. These withholdings help ensure you don’t owe a large tax bill when you file your state tax return. If too much is withheld, you may get a state refund. If too little is withheld, you might owe more to your state at tax time.

If you need to pay taxes to more than one state, like if you work in one state but live in another, you might want to ask your employer to withhold taxes for both states. Or you can make estimated tax payments to the other state to cover what you owe.

3. Local income tax withholding (LITW)

If your city or local community has an income tax, your employer may withhold local taxes. Rates and rules vary depending on where you live.

Knowing if your employer withholds local taxes can help you plan ahead and avoid surprises when you file your tax return.

Local income tax might be withheld on wages you earn inside city, county, and school district boundaries. If you live or work in an area that levies a tax, your wages will be taxed by that jurisdiction.

4. Medicare (MWT or Med) and Social Security withholdings (Social Security: FICA tax, SS, SSWT, or OASDI)

You’ll also see Medicare and Social Security withholdings on each paycheck. This is true even if you have nothing withheld for federal, state, and local income taxes.

What is FICA on my paycheck?

Another word for this is FICA tax. FICA, short for Federal Insurance Contributions Act, is a payroll tax that goes toward Social Security and Medicare. You and your employer split this amount of payroll tax, which equals 15.3% of your earnings. If you’re an independent contractor, you’ll be responsible for paying the full FICA tax rate. (Learn more about self-employment taxes.)

Social Security

If you earn at least a specified amount for at least 40 quarters, you can get Social Security benefits when you retire. For 2025, the first $176,100 of your gross earnings are subject to the 6.2%Social Security tax. Your employer pays the other half.

Medicare

Unlike Social Security tax, Medicare taxes pay for expenses for current Medicare beneficiaries.

Your employer withholds 1.45% of your gross income from your paycheck. They also pay an additional 1.45%, the employer part of the Medicare tax. There are no income limits for Medicare tax, so all covered wages are subject to Medicare tax.

Employers must also withhold an additional 0.9% (2.35% total) of Medicare tax on earned income in a tax year of more than $200,000 (Single filers), $250,000 (Married Filing Jointly), and $125,000 (Married Filing Separately).

5. Year-to-date pay

Your paycheck stub might also show year-to-date totals. This is good to know if you want to estimate if you’ll have a tax refund or balance due at the end of the year.

Save the last paycheck stub to compare with your W-2. The amounts on the last stub and the W-2 amounts usually should match. However, your employer might have added other amounts for additional benefits offered. These could be taxable income for you. Contact your employer or payroll department if there are any differences.

6. Other items shown on an employee paycheck

Your paycheck stub may also show deductions for health or life insurance. If it does, your stub might show if the premiums were deducted before tax or after tax. Pre-tax deductions will reduce the income tax withholding to federal, state, and local governments.

Some employers offer their employees the chance to contribute to retirement plans, like 401(k)s. Others offer childcare or adoption assistance. If you took advantage of any of these plans, your stub will show those deductions.

What determines your federal income tax withholding

Your employer withholds from your paycheck based on the information you fill in on your Form W-4, like:

• The filing status shown on your W-4 form
• The number of dependents specified, and
• Other income and adjustments on the Form W-4 you filed with your employer.

Changing your federal withholdings year to year

It’s a good idea to check your withholdings each year. You can use your paystub and our W-4 calculator to find out if you need to make any changes to your federal income tax withholding.

• If you’re withholding too much (i.e., withholding more than what’s needed to cover your tax liability), you might receive a big tax refund this year. You may want to consider adjusting your withholding to have more take-home pay each pay period.
• If you’re not withholding enough federal tax, you could be at risk for an underpayment penalty. It’s a good idea to adjust your withholding using Form W-4. (Read about how to fill out a W-4).   

Get help filing your taxes

Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible, taking every tax credit and deduction into consideration.