Everything that comes out of your paycheck — what it is, why it exists, and how much it actually costs you.
You negotiated a $75,000 salary. Your first paycheck shows up for $2,200. Where did the other half go?
This is one of the most common financial shocks people experience when they start working. The gap between gross pay and net pay — what you earn versus what you actually receive — can feel enormous, especially early in your career. Understanding each line on your pay stub makes that gap a lot less alarming.
Here is every deduction on a typical US paycheck, explained clearly.
This is usually the largest deduction on your paycheck. Your employer withholds federal income tax from each paycheck based on your W-4 form and the IRS withholding tables. The amount depends on your annual salary, filing status (single, married, head of household), and any additional withholding you requested.
For a $75,000 salary with standard W-4 settings as a single filer in 2026, your employer withholds roughly $485 per bi-weekly paycheck for federal income tax — about 16.8% of your gross pay annually.
Important: withholding is an estimate. Your actual tax liability is settled when you file your return in April. If too much was withheld, you get a refund. If too little, you owe the difference.
Social Security is part of FICA — the Federal Insurance Contributions Act. You pay 6.2% of your wages, and your employer pays a matching 6.2%. Your contributions fund retirement, disability, and survivor benefits.
In 2026, Social Security tax applies only on wages up to $168,600 — the wage base. Once your year-to-date earnings cross that threshold, Social Security deductions stop for the rest of the calendar year. High earners often notice their paychecks get a bit larger in the autumn as a result.
On a $75,000 salary, you pay $4,650 in Social Security tax per year — $179 per bi-weekly paycheck.
Also part of FICA, Medicare funds health insurance for people 65 and older. Unlike Social Security, there is no wage cap — you pay 1.45% on every dollar you earn, no matter how high your salary goes.
High earners — above $200,000 for single filers and $250,000 for married filing jointly — pay an additional 0.9% Medicare surtax. This extra 0.9% is only withheld from the employee side; employers do not match it.
On a $75,000 salary, Medicare tax is $1,088 per year — about $42 per bi-weekly paycheck.
Most states add their own income tax on top of federal tax. Rates vary significantly:
For a $75,000 salary in California, state tax withholding runs approximately $211 per bi-weekly paycheck. In Texas, it's $0.
These deductions come out before taxes are calculated, which means they reduce the amount of income you are taxed on. They are voluntary in the sense that you choose to participate, but many employees consider them essential.
If your employer offers a 401k plan and you participate, your contributions are deducted pre-tax. This means every dollar you contribute reduces your taxable income by one dollar. The 2026 contribution limit is $23,500 (plus a $7,500 catch-up contribution if you are 50 or older).
Here is why this matters in practice: if you are in the 22% federal bracket, a $500/month 401k contribution costs you only $390/month out of pocket — because you save $110/month in federal taxes alone. The state tax savings come on top.
Many employers offer a matching contribution — free money that requires only that you contribute enough to get it. If your employer matches 50% up to 6% of your salary, contributing at least 6% is one of the best financial decisions you can make.
If you participate in your employer's health insurance plan, your share of the premium is typically deducted pre-tax from each paycheck under a Section 125 cafeteria plan. This saves you both federal income tax and FICA taxes on that amount.
Health insurance premiums vary enormously — from $50 to $500+ per month depending on your employer, the plan you choose, and your family situation.
If you have a high-deductible health plan (HDHP), you may contribute to a Health Savings Account. HSA contributions are triple tax-advantaged: pre-tax going in, tax-free growth, and tax-free withdrawals for qualified medical expenses. The 2026 limits are $4,300 for individual coverage and $8,550 for family coverage.
Similar to an HSA but more flexible in which plans qualify. FSA contributions are pre-tax but have a "use it or lose it" rule — unspent funds typically expire at year end. The 2026 FSA limit is $3,300.
Often offered separately from medical insurance, dental and vision premiums are typically also pre-tax deductions under your employer's cafeteria plan.
If your employer offers a Roth 401k option, contributions come from after-tax dollars — no immediate tax deduction. But qualified withdrawals in retirement are completely tax-free, including all investment growth. Whether traditional (pre-tax) or Roth is better depends on whether you expect to be in a higher or lower tax bracket in retirement.
Employer-sponsored life insurance premiums for coverage above $50,000 face value are taxable as imputed income. Short-term and long-term disability insurance premiums paid by you with after-tax dollars mean that any disability benefits you receive are tax-free.
Court-ordered deductions for child support, alimony, student loan defaults, or creditor judgments come out after taxes. These are not voluntary and cannot be stopped without a court order.
Some cities add their own income tax on top of federal and state taxes. Notable examples include New York City (up to 3.876%), Philadelphia (3.75% for residents), Detroit, Cleveland, and Columbus. If you live or work in one of these cities, you will see an additional withholding line on your pay stub.
| Deduction | Per bi-weekly paycheck | Annual |
|---|---|---|
| Gross pay | $2,885 | $75,000 |
| Federal income tax | −$485 | −$12,580 |
| California state tax | −$211 | −$5,492 |
| Social Security (6.2%) | −$179 | −$4,650 |
| Medicare (1.45%) | −$42 | −$1,088 |
| Net take-home pay | $1,968 | $51,190 |
That is before any voluntary deductions like 401k or health insurance. If you add a 5% 401k contribution ($3,750/year), your federal and state tax bills drop, and your actual net pay changes by less than the full contribution amount.
The most reliable way to increase your net paycheck is to increase your pre-tax deductions strategically:
Sources: IRS Publication 15, IRS Publication 969, IRS Form W-4 instructions, FICA regulations. This article is for informational purposes only and does not constitute tax or financial advice.