Every Pay Stub Deduction Explained (2026): Taxes, Benefits, and Withholdings

Why Understanding Deductions Matters

Earn $4,000 biweekly, see $2,800 in the bank, and the natural question is where the missing $1,200 went. The deduction column is the only place that answers that, line by line.

Reading it carefully catches payroll errors before they become W-2 mismatches at the end of the year. It also tells you whether bumping your 401(k) by $200 a paycheck would actually change your take-home in a meaningful way, and whether the new dental plan you elected during open enrollment really started withholding the right premium. Most paycheck disputes trace back to a single deduction line nobody read for six months. If you earn commission, bonus, or tipped pay, withholding on those amounts follows different rules than salaried pay.

Federal Income Tax

Federal income tax is the largest deduction on most pay stubs. Withholding depends on gross pay, filing status, and your W-4 elections.

The 2026 federal tax brackets for a single filer (per IRS Rev. Proc. 2025-32, which incorporates the One Big Beautiful Bill Act adjustments) are:

These are marginal rates. A worker in the 22% bracket pays 10% on the first $12,400 of taxable income, 12% on the next slice, and only 22% on the portion above $50,400. The effective rate, total tax divided by total income, always sits below the marginal bracket. Married-filing-jointly thresholds run roughly double the single thresholds through the 32% bracket, then narrow at the top: the 37% MFJ threshold ($768,700 for 2026) is only about 1.2 times the single threshold, not double. Head-of-household sits in between.

The stub shows per-period withholding, not annual tax. A single filer at $60,000 paid biweekly with the 2026 standard deduction owes around $5,020 in federal income tax for the year, or roughly $193 per biweekly check. Withholding changes whenever the W-4 changes, and resets every January 1, so a mid-December stub and a mid-January stub often look different even when nothing about the job changed.

State Income Tax

State income tax structure depends entirely on where you work.

No state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. The state-tax line simply doesn't appear on those pay stubs. (New Hampshire's Interest & Dividends Tax was fully repealed effective January 1, 2025, so NH no longer taxes any individual income.)

Flat-rate states: Illinois (4.95%), Indiana (2.95% state, plus county taxes that vary widely), Michigan (4.25%), Pennsylvania (3.07%), among others. Deduction is simply gross pay times the flat rate.

Progressive-rate states: California, New York, New Jersey, and most others use graduated brackets. California's top marginal rate is 13.3% but only applies to taxable income above $1 million; a typical $60,000 California earner pays an effective state rate closer to 4-5%.

State tax on each stub is based on the current bracket schedule and the pay-period gross annualized out. Workers in no income tax states see zero on that line. If you suspect withholding is wrong or your employer isn't issuing a stub you're entitled to, see what your state requires.

Social Security Tax (OASDI)

OASDI (Old-Age, Survivors, and Disability Insurance) is Social Security tax at 6.2% of gross. The arithmetic is easy to verify on your own stub: $2,000 of gross pay produces $124 of OASDI. The 2026 wage base is $184,500, so once year-to-date Social Security wages cross that figure, the OASDI line zeroes out and net pay jumps for the remainder of the year. Your employer pays a matching 6.2% but their half never shows up on your stub.

Medicare Tax

Medicare is 1.45% on every dollar with no wage cap. For $2,000 of gross, that's $29 per period, and the rate applies the same way to a part-time barista and a partner at a law firm.

Above $200,000 in a year (single filer; $250,000 MFJ), the Additional Medicare Tax of 0.9% kicks in. Per IRS Topic No. 560 the surtax falls only on the employee side, so the employer's matching contribution stays at 1.45%. Look for "Add'l Medicare" or "Medicare Surtax" on the stub once year-to-date wages cross the threshold.

FICA Summary

FICA (Federal Insurance Contributions Act) is the combined Social Security and Medicare line: 7.65% of gross (6.2% + 1.45%) up to the Social Security wage base, dropping to 1.45% on earnings above the base. High earners then add the 0.9% Additional Medicare Tax once they pass $200,000.

For most workers FICA is the second-largest line on the stub after federal income tax. A $60,000 salary costs $4,590 in FICA over the year. The full 7.65% rate applies all year on that salary because the wage base is well above $60,000.

Health Insurance Premiums

Employer-sponsored health insurance premiums are generally pre-tax. They reduce federal taxable wages, FICA wages, and (in most states) state taxable wages because they're elected through a Section 125 cafeteria plan, the IRC provision that authorizes pre-tax employee benefits.

Insurance deductions usually appear as separate line items:

• Medical: $100–$500+ per period, depending on plan tier and coverage level
• Dental: $15–$75 per period
• Vision: $5–$25 per period

Amounts vary by tier (individual, employee + spouse, family) and by the employer contribution model. Most employers cover roughly 50–80% of the premium and the rest comes off your check.

Retirement Contributions

401(k) / 403(b) Traditional

Traditional 401(k) contributions are pre-tax. Six percent of $60,000 ($3,600 a year, or $138.46 biweekly) comes off federal taxable wages but not FICA wages, so Social Security and Medicare still withhold on the full gross. Taxes are due on the contributions and any growth when you take distributions in retirement.

2026 limits: $24,500 for employee deferrals, $32,500 with the standard age-50 catch-up of $8,000, and $35,750 for participants age 60 through 63 under the SECURE 2.0 enhanced catch-up. A separate SECURE 2.0 rule kicks in January 1, 2026: workers who earned more than $150,000 in FICA wages the previous year must make any catch-up contributions on a Roth basis.

Roth 401(k)

Roth contributions are made with after-tax dollars. They don't reduce current taxable income, but qualified withdrawals (including growth) come out tax-free in retirement. On the stub, Roth contributions are deducted from net rather than from gross.

Employer Match

Employer matching contributions do not appear in the deduction column of your stub because no money is being deducted from your check. The match is paid directly from the employer into your retirement account. It still counts toward the combined IRS limit on contributions to a 401(k) plan ($72,000 in 2026 for combined employee and employer contributions), so it's worth tracking on your retirement statement even though it never shows up on payroll.

Other Common Deductions

HSA: Pre-tax health-savings-account contributions, paired with a qualifying high-deductible health plan. 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage, with an additional $1,000 catch-up at age 55+.

Health FSA: Pre-tax medical-spending account. The 2026 limit is $3,400 per employee (Rev. Proc. 2025-32), up from $3,300 in 2025. Plans that allow carryover can roll up to $680 into the next plan year.

Dependent-care FSA: Pre-tax account for child or elder care expenses. The One Big Beautiful Bill Act raised the annual limit from $5,000 to $7,500 effective January 1, 2026 (the first change to this cap in nearly 40 years). Employers must amend their Section 125 plan documents to adopt the higher limit; not every employer will, so check your benefits portal before assuming the new cap applies.

Life insurance: Supplemental premiums show up here. Employer-paid basic coverage above $50,000 in face value is treated as imputed income.

Disability: California SDI is mandatory at 1.3% of all wages in 2026 with no wage cap. Other states (New York, New Jersey, Rhode Island, Hawaii, Puerto Rico) have their own state disability programs with their own rates and caps.

Union dues: A fixed monthly amount or a percentage of gross earnings depending on the local's bylaws.

Wage garnishments: Court-ordered for child support, defaulted loans, back taxes, or civil judgments. These are involuntary and follow priority rules set under federal and state law.

Commuter benefits: Pre-tax transit or parking benefits, capped at $340 per month in 2026 (the IRS raised the limit by $15 from 2025).

Verifying Your Deductions Are Correct

Review deductions twice a year: once after open enrollment in January, once around mid-year when payroll system updates have settled.

Cross-check federal withholding against your expected annual liability. Refunds over $1,000 generally mean too much was withheld, and owing at filing means too little. The W-4 is the tool that fixes it. While you're at it, confirm your state withholding still matches the current bracket schedule (state tax law changes more often than people realize), confirm your benefit elections match what payroll is taking, and watch for the Social Security line zeroing out once year-to-date wages clear $184,500.

See All Your Deductions on a Professional Pay Stub

Create a pay stub with Paystub Pilot to view gross, federal tax, state tax (all 50 states), Social Security, Medicare, and custom deductions—all calculated automatically. Free preview.