Where Your Paycheck Goes: Every Deduction Explained

One paycheck, line by line

A single filer earning $75,000, paid biweekly (26 paychecks), no state income tax, no pre-tax deductions:

The three mandatory deductions

Social Security — 6.2%, capped

Applies to the first $184,500 of wages in 2026, a maximum of $11,439. High earners see their take-home jump partway through the year when they cross the cap. Your employer pays a matching 6.2%.

Medicare — 1.45%, uncapped

No ceiling. An Additional Medicare Tax of 0.9% kicks in above $200,000 of wages for single filers, and unlike the rest of FICA the employer does not match it.

Federal income tax — variable

This is the only one based on brackets rather than a flat rate, and the only one your W-4 controls. It is an estimate of your final bill, trued up when you file. If you get a large refund every year, you lent the government money interest-free — understanding the bracket ladder helps you set withholding closer to the mark.

The deductions you control

On the $75,000 example, contributing 5% to a traditional 401(k) — $3,750 a year — cuts federal income tax by about $825. Your take-home falls by $2,925, not the full $3,750, because the tax saving covers the rest.

Why your stub never matches a simple calculation

• Pay frequency. Biweekly means 26 paychecks, not 24. Two months a year contain three paychecks.
• Bonuses. Usually withheld at a flat 22% supplemental rate regardless of your bracket, so they over- or under-withhold.
• Benefits timing. Premiums often change at the plan-year boundary, not in January.
• State and local tax. Nine states have no wage income tax; others take 3% to 10%+ on top of everything above.

If you are paid hourly rather than salaried, the other half of the accuracy problem is your timesheet — converting minutes to decimal hours correctly is what stops small rounding errors compounding across a year.