Net Pay Deductions Explained (2026): Where Each Dollar Goes

Most People Keep 70-80%

Across ordinary wage levels, take-home lands between roughly 70% and 80% of gross. Where you fall inside that band is decided by four things: your state, your filing status, your pre-tax contributions, and your benefit costs.

Model your own stub in the net pay calculator and use this guide to understand each line.

FICA: The Flat Part

• Social Security: 6.2% of gross up to the annual wage base. Above the base, it stops for the rest of the year.
• Medicare: 1.45% of all gross, with no cap, plus an extra 0.9% on wages above $200,000.

Together, 7.65% for most workers. Two things worth knowing: FICA is calculated on full gross, so retirement contributions never reduce it; and your employer pays a matching 7.65% you never see on the stub.

Federal Income Tax: The Sliding Part

This is the line people misread. Brackets are marginal — only the dollars inside a band pay that band's rate. Earning your way into the 22% bracket does not tax your whole income at 22%. Your effective rate stays well below your top bracket, typically 10–15% for mid-range wages after the standard deduction.

Your W-4 drives what is actually withheld: filing status, dependants, multiple jobs, and any extra withholding you requested. Two coworkers on identical pay can take home noticeably different amounts purely from W-4 choices.

State and Local Tax

Nine states levy no broad income tax on wages. Others run flat rates near 3–5%, and a handful reach 9%+ at higher incomes. Cities add their own in places like New York City and parts of Ohio, Pennsylvania and Missouri. Some states also withhold small amounts for paid family leave or disability programmes.

Pre-Tax vs Post-Tax Deductions

Pre-tax — traditional 401(k), HSA, FSA, Section 125 health, dental and vision premiums, some commuter benefits. These reduce the wages your income tax is measured against, so $200 contributed costs less than $200 of take-home.

Post-tax — Roth 401(k), union dues, life insurance above the tax-free limit, wage garnishments, repayment of advances.

A worked example on $2,000 biweekly gross, single, 4% state, 5% retirement, $120 premium: about $100 retirement, $120 premium, $173 federal, $153 FICA, $71 state — near $1,383 net, or 69%.

Garnishments Have Limits

Federal law caps ordinary creditor garnishment at the lesser of 25% of disposable earnings or the amount above 30 times the federal minimum wage. Child support and federal tax debt follow different, higher limits. If a garnishment on your stub looks larger than that, ask for the order and the calculation in writing.

Three Moves That Change Your Net Pay

• . Fix the W-4 rather than chasing a refund. A large refund is a year of interest-free lending; a large bill risks penalties.
• . Capture the full employer match. It is the only part of your compensation with an instant return.
• . Confirm premiums run pre-tax. A mislabelled deduction costs real money every period.

Related Tools

• Gross pay calculator — build the earnings side first
• Monthly salary calculator — turn net pay into a monthly budget
• Paycheck calculator — full state-by-state breakdown