Paycheck Tax Withholding Breakdown | H&R Block
Paycheck stubs contain a lot of information. They show your pay as well as your federal income tax withholdings and vacation balance. All paycheck stubs show your gross pay — the total amount you earned before any taxes were withheld for the pay period. They also show your net pay — the amount of your check after all withholdings.
Common paycheck stub items
Federal tax — Federal income tax might be abbreviated as Fed Tax, FT, or FWT. This amount is what you’ve already paid the federal government. So, when you file your return, you’ll get a credit for this amount to apply to any tax you’ll owe the federal government. The amount withheld from your pay depends on:
- If you’re married or single
- How many allowances you claim on the Form W-4 you filed with your employer
If you’re married, you can withhold at the higher single rate.
State and local tax — State income tax might be abbreviated St Tax, ST, or SWT. Your paycheck might also show the abbreviation of the state for which tax is being withheld (Ex: IL tax).
Depending on where you live, you might:
- Not have state withholding
- Have withholding for more than one state — the state you live in and the state(s) you work in
Local income tax might be withheld on wages you earn inside city, county, and school district boundaries. If you live or work in an area that levies a tax, your wages will be taxed by that jurisdiction.
Social Security and Medicare tax — Social Security tax might be abbreviated FICA, SS, SSWT, or OASDI. Usually, you must have these withheld. This is true even if you have nothing withheld for federal, state, and local income taxes.
If you earn at least a specified amount for at least 40 quarters, you can get Social Security benefits when you retire. Each employer withholds 6.2% of your gross income for Social Security up to income of $118,500 for 2017. Your employer must pay 6.2% for you that doesn’t come out of your pay.
Medicare tax might be abbreviated MWT or Med. This amount is withheld so you’ll be covered by Medicare when you reach age 65. The amount withheld from your pay is 1.45% of your gross income. Your employer pays an additional 1.45% that doesn’t come out of your paycheck. There are no income limits on Medicare tax, so all covered wages are subject to Medicare tax.
Starting in 2013, employers must withhold an additional 0.9% (2.35% total) of Medicare tax on your earned income. This is only for income more than $200,000.
Year-to-date — Your paycheck stub might also show year-to-date totals. This is good to know if you want to estimate if you’ll have a refund or balance due at the end of the year.
Save the last paycheck stub to compare with your W-2. The amounts on the last stub and the W-2 amounts usually should match. However, your employer might have added other amounts for additional benefits offered. These could be taxable income for you. Contact your payroll department if there are any differences.
Other items — Your paycheck stub might show deductions for health or life insurance. If it does, your stub might show if the premiums were deducted before tax or after tax. Before-tax deductions will reduce the income tax you pay to federal, state, and local governments.
Some employers offer their employees the chance to contribute to retirement plans, like 401(k)s. Others offer childcare or adoption assistance. If you took advantage of any of these plans, your stub will usually show deductions for them.
If you have questions about other amounts on your paycheck stub, check with your manager or your human resources department.
To learn more, see these tax tips:
- W-4 Withholding
- Withholding Allowances
- Form 1099
- State and Local Income Taxes
- Income Tax Online Filing
Maximize your return and learn more about deducting homeowner’s insurance premiums from your taxes with advice from the Tax Experts at H&R Block.
Can you deduct job hunting expenses from your taxes this year? Learn more from the tax experts at H&R Block.
Learn more about deducting payments made to your spouse with advice from the tax experts at H&R Block.
Will you get a refund for an energy tax credit? Learn more about refundable tax credits from the tax experts at H&R Block.