Why is your paycheck smaller than your salary? FICA takes 7.65%, and here's the rest

Before your employer sends a dollar to your bank, 7.65% of most paychecks goes to two federal programs. Social Security takes 6.2% and Medicare takes 1.45%, a pair known as FICA after the Federal Insurance Contributions Act. Gross pay is what you earned and net pay is what lands in your account. The rest of the gap comes from benefits you chose, a form you filled out on your first day, and the tax rules where you live.

Start with your most recent pay stub, on paper or in the payroll app. Find four numbers: gross pay, total pre-tax deductions, federal income tax withheld and net pay. The sections below follow the stub from top to bottom, in the order the money comes off.

A $2,000 paycheck, line by line

Take a single worker paid $2,000 every two weeks, about $52,000 a year, in a state with a flat 3% income tax. She puts 5% of her pay in a traditional 401(k), pays $80 per check for health coverage and has $25 in union dues taken out. Of the $2,000, $1,458.97 reaches her bank.

Taxes account for $336.03 of the gap. The other $205 went to things she signed up for, $180 of it pre-tax and $25 after tax. Lay your own stub beside the chart and sort each of your lines into one of its four colors.

Pre-tax deductions come off first

Pre-tax deductions leave your pay before income tax is figured. The usual ones are a traditional 401(k) or 403(b), the health, dental and vision premiums an employer runs through what it calls a Section 125 or cafeteria plan, and deposits to a health savings account (HSA) or flexible spending account (FSA).

Each has a federal ceiling. The IRS announced in November 2025 that the 401(k) limit for 2026 is $24,500. HSA deposits top out at $4,400 for self-only coverage and $8,750 for family coverage, and a health FSA at $3,400.

The two kinds don’t shrink the same taxes. Premiums paid through a cafeteria plan skip both income tax and FICA. A traditional 401(k) contribution skips federal income tax, and state tax in most states, but FICA still applies to it. So the example worker’s FICA is figured on $1,920, not $1,820, and comes to $119.04 for Social Security and $27.84 for Medicare.

The same rule means $100 into a traditional 401(k) doesn’t cost her $100 of take-home pay.

Her top withholding rate is 12%, so federal withholding drops by $12.00 and the 3% state tax by $3.00. Net pay falls by $85.00. Check whether your stub’s retirement line says pre-tax or Roth, because the two land in different places on the stub.

Federal withholding and your W-4

Federal income tax withholding is the line you have the most say over, through Form W-4. Payroll feeds your answers into the IRS’s Publication 15-T tables, which turn one paycheck into a yearly figure, subtract a set amount and apply the brackets.

For a single filer who checked no boxes, that set amount is $8,600 in 2026.

The example worker’s taxable pay is $1,820 a check, or $47,320 over 26 checks. Subtracting the $8,600 leaves $38,720.

The 2026 table taxes that at 10% and 12%, for $3,498.40 over the year. Divided by 26, it’s the $134.55 on her stub.

The W-4 has worked this way since 2020, when the IRS dropped the old withholding allowances to make the form simpler and more accurate. If a new hire never turns one in, the employer withholds as if that person were single with no other adjustments. Bonuses often follow a separate rule, since employers can withhold a flat 22% on supplemental pay, and a bonus check can look heavily taxed as a result.

One stub can’t tell you whether your withholding is right for the whole year. The IRS’s Tax Withholding Estimator takes about 25 minutes, asks for your latest pay stubs and can produce a filled-in W-4. The IRS suggests running it every January and after a new job, a marriage or a big change in income, and a tax professional can help when your return is complicated.

State and local taxes

Eight states levy no individual income tax at all, according to the Tax Foundation: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. Washington taxes certain capital gains but not wages, so workers in nine states see no state income tax line. If you live and work in one of them, your stub’s state tax line should be blank or missing.

Elsewhere, some states charge one flat rate, such as Pennsylvania at 3.07% and Illinois at 4.95%, while most use brackets like the federal system.

A few states add a payroll line of their own. California’s State Disability Insurance takes 1.3% of wages in 2026, and since 2024 it has had no wage cap, so it applies to every dollar earned. Some cities, counties and school districts tax wages too. If your stub shows a city or school district line, make sure it names the place you live or work.

The 7.65% for FICA

Social Security tax is 6.2% of wages up to a yearly cap, which the IRS puts at $184,500 for 2026. Past the cap it stops, so the most one employer can withhold this year is $11,439. Medicare tax is 1.45% of every dollar, with no cap.

Your employer pays a matching 6.2% and 1.45% on top of your wages, and that share never comes out of your check.

High earners get one more line. Once wages from one employer pass $200,000 in a year, the employer must withhold an extra 0.9% Medicare tax on the pay above that mark, whatever your filing status. The tax you finally owe uses a $250,000 threshold for married couples filing jointly, so some people settle the difference on their return.

The cap also gives high earners a late-year bump in take-home pay. Someone paid $250,000 a year in 26 equal checks reaches $184,500 in their 20th paycheck, and the Social Security line goes blank for the last six checks of the year. If you held two jobs and paid more than $11,439 in total, the extra comes back as a credit when you file.

Deductions after tax

Anything taken out after tax sits near the bottom of the stub. Roth 401(k) contributions go here. You pay income tax on that money now, and qualified withdrawals in retirement come out tax-free. Roth and traditional contributions share the same $24,500 limit.

Union dues, some life and disability insurance, charity pledges made through work, and court-ordered garnishments such as child support also come off after tax. A line here you don’t recognize is worth an email to payroll this week.

Pay stub abbreviations decoded

No two payroll systems use quite the same labels. These are the common ones, with the 2026 figures that apply.

MED can mean a health premium on one stub and Medicare tax on another. Check which section of the stub it sits in, deductions or taxes.

Check your next stub

When the next one arrives, give it two minutes and check these three lines.