Your gross pay looks great — until 8 different deductions take a third of it. What are all these lines? Which are required? Which can you control? Here's every common paycheck deduction explained.
Required Deductions (Can't Avoid)
1. Federal Income Tax (FIT)
The IRS requires employers to withhold federal income tax from every paycheck based on your W-4 (filing status and allowances). This is an estimate of what you'll owe for the year. Your actual tax is calculated when you file.
- How much: Depends on your income, W-4, and tax bracket. Typically 10-25% of gross for most workers.
- Can you change it? Yes. Update your W-4 to adjust withholding.
- Refund vs owe: If too much is withheld, you get a refund. Too little, you owe.
2. Social Security Tax (OASDI)
Funds Social Security retirement and disability benefits. You pay 6.2% of gross up to the annual wage base ($176,100 in 2026). Once you hit the cap, SS tax stops for the rest of the year.
- Can you change it? No. It's a fixed 6.2% for everyone (unless you're self-employed, then it's 12.4%).
3. Medicare Tax
Funds Medicare health insurance. You pay 1.45% of all wages — no cap. If you earn over $200K (single) or $250K (married), an additional 0.9% Medicare surtax applies.
- Can you change it? No. It's mandatory.
4. State Income Tax (SIT)
Most states withhold income tax from your paycheck. Rates vary by state (0% in TX, FL, WA, etc.; 5-10% in CA, NY, etc.).
- Can you change it? Yes, by updating your state W-4 equivalent (varies by state).
5. Local/City Tax
Some cities and counties impose their own income tax (e.g., NYC, Philadelphia, Detroit). This is separate from state tax.
- Can you change it? No, if you work in that jurisdiction, you pay it.
Pre-Tax Deductions (Reduce Taxable Income)
These come out before federal and state tax, lowering your taxable income and saving you money.
Health Insurance Premiums
Your share of employer-sponsored health, dental, and vision insurance. Pre-tax means you don't pay income tax on this money.
- Can you change it? Yes, during open enrollment or with a qualifying life event.
401(k) or 403(b) Contributions
Retirement savings deducted before tax. Reduces taxable income now; you pay tax when you withdraw in retirement.
- 2026 limit: $23,500 (plus $7,500 catch-up if 50+).
- Can you change it? Yes, usually anytime through your HR portal.
Health Savings Account (HSA)
Pre-tax savings for medical expenses. Only available if you have a high-deductible health plan.
- 2026 limit: $4,300 individual, $8,550 family.
- Can you change it? Yes, usually anytime.
Flexible Spending Account (FSA)
Pre-tax account for medical or dependent care. Use-it-or-lose-it each year.
- 2026 limit: $3,200 health FSA, $5,000 dependent care.
- Can you change it? Only during open enrollment unless you have a qualifying event.
Commuter Benefits
Pre-tax deductions for transit passes or parking (if your employer offers it).
- 2026 limit: $325/month.
- Can you change it? Yes, usually monthly.
Post-Tax Deductions (After Tax)
These come out after federal and state tax, so they don't reduce taxable income.
Roth 401(k) Contributions
Retirement savings made with after-tax dollars. Grows tax-free; withdrawals in retirement are tax-free.
- Can you change it? Yes, switch between traditional and Roth 401(k) anytime.
Garnishments
Court-ordered deductions for child support, alimony, tax levies, student loans, or creditor judgments.
- Can you change it? No. Only the court or agency can release the garnishment.
Union Dues
Mandatory if you're in a union.
- Can you change it? No, unless you leave the union.
Life/Disability Insurance (if post-tax)
Some employer-offered insurance is post-tax.
- Can you change it? Yes, during open enrollment.
Charitable Contributions
Payroll deduction to charities you've elected.
- Can you change it? Yes, stop or adjust anytime.
How to Verify Deductions Are Correct
- FICA check: Add Social Security + Medicare. Should equal 7.65% of gross (or 6.2% if you hit the SS cap).
- Federal tax: Use the IRS withholding calculator. If your stub withholding is way off, update your W-4.
- State tax: Check your state's withholding tables or calculator.
- Pre-tax deductions: Log into your HR portal and verify your elections for health, 401(k), HSA, FSA. Do they match your pay stub?
- Post-tax deductions: Make sure you recognize every line. If something appears you didn't authorize, contact HR immediately.
How to Reduce Deductions (Legally)
- Adjust your W-4: If you're being over-withheld and always get a big refund, claim more allowances to reduce federal withholding.
- Max pre-tax accounts: Increase 401(k), HSA, or FSA contributions to lower taxable income (and thus federal/state tax).
- Drop unnecessary coverage: During open enrollment, downgrade health/dental plans if you're paying for coverage you don't use.
- Relocate to a no-tax state: If you're remote, moving to TX, FL, WA, etc. eliminates state income tax (but check reciprocity rules).
You can't avoid FICA or federal tax entirely, but you can optimize withholding and maximize pre-tax deductions to keep more of your paycheck.