Short answer: taxes are taken out of your paycheck by your employer, in a fixed order, before the money reaches your bank account. First come pre-tax deductions (401(k), health premiums), then federal income tax (guided by your W-4), then Social Security and Medicare at flat rates, and finally state and local taxes.
Concrete example: you earn a $70,000 salary and get paid every two weeks — $2,692.31 gross per check. Out of that one check, about $252.69 goes to federal income tax, $166.92 to Social Security, and $39.04 to Medicare. That's $458.65 in federal withholdings, or about 17% of the check, leaving $2,233.66 before any state tax or deductions. The rest of this article walks through exactly how each line is computed, so you can check your employer's math.
You don't send the IRS a check every payday — your employer does. Under the pay-as-you-go tax system, every employer is legally required to withhold a portion of your wages and send it to the IRS and your state on your behalf. What lands in your account is the net pay; what your salary contract quotes is the gross pay; everything between them is withholding plus voluntary deductions.
Withholding is not your final tax bill. It's an estimate the employer makes each pay period based on the instructions you gave them. When you file your tax return in April, the IRS compares what was withheld against what you actually owed. Withheld too much, you get a refund. Withheld too little, you owe the difference (and possibly an underpayment penalty). That's why understanding the mechanics matters: you're the one who tells your employer how much to estimate, via the W-4.
Before any tax is computed, certain deductions reduce the wage amount the taxes apply to. These are called pre-tax deductions: traditional 401(k) contributions, health insurance premiums, HSA contributions, and dental/vision premiums. If your gross is $2,692.31 and you put $150 toward your 401(k) and $85 toward health insurance, your taxable wages for federal withholding drop to $2,457.31. The taxes that follow are computed on the smaller number.
This is the main legal way people shrink their per-check tax bite without touching their tax bracket. A dollar of pre-tax deduction saves you roughly your marginal tax rate plus 7.65% in FICA — on a 22% marginal bracket, $100 of 401(k) contribution saves about $29.65 in that paycheck's withholdings.
Federal income tax is the biggest slice and the least predictable, because it's not a flat rate — it's a graduated set of brackets from 10% to 37%, applied to your annualized income. Your employer takes each paycheck's taxable wages, multiplies it out to a full year, subtracts the standard deduction ($16,100 for single filers in 2026), and runs the result through the brackets.
Here's the 2026 single-filer math on our $70,000 example. Annual taxable income is $70,000 − $16,100 = $53,900. The brackets: 10% on the first $12,400 ($1,240), 12% on the next $38,000 ($4,560), and 22% on the remaining $3,500 ($770). Total annual federal income tax: $6,570, or about $252.69 per biweekly check.
The whole calculation hinges on your Form W-4. Claiming the standard deduction, listing a spouse or dependents, or adding extra withholding all shift the number. If you filed a W-4 that tells your employer to withhold an extra $50 per check, that's $50 more out of every paycheck, dollar for dollar. Review your W-4 after any big life change — marriage, a new baby, a second job — because an old W-4 is the most common reason people's withholdings feel wrong.
FICA taxes are the simplest lines on your pay stub because they're flat percentages of your wages, no brackets involved. Social Security takes 6.2% of your wages up to a cap of $184,500 in 2026. Once your year-to-date earnings pass the cap, the Social Security line drops to zero for the rest of the year. Medicare takes 1.45% of all wages with no cap.
On our $2,692.31 check: Social Security is $2,692.31 × 6.2% = $166.92. Medicare is $2,692.31 × 1.45% = $39.04. Combined FICA: $205.96 per check, every check, until you hit the Social Security cap.
One more wrinkle: if you earn more than $200,000 in a year, an additional Medicare tax of 0.9% applies to wages above that threshold. Your employer starts withholding it once your year-to-date wages cross $200,000, which is why some high earners notice their Medicare line jump in the fall.
After federal taxes, your state takes its cut — and this is where two identical salaries diverge the most. Nine states (Texas, Florida, Washington, Nevada, Wyoming, South Dakota, Alaska, Tennessee, New Hampshire) levy no income tax at all, so the state line is zero. Others, like California and New York, apply their own graduated brackets; a handful of cities (New York City, Philadelphia, parts of Ohio) add local income taxes on top.
State withholding works like the federal version: your employer estimates based on a state-specific withholding form (many states accept the federal W-4; some, like California's DE 4, want their own). If you moved during the year or work in one state and live in another, double-check that your employer is withholding for the right state — it's one of the most common payroll setup errors, and it doesn't fix itself at tax time.
Putting it together for one biweekly paycheck at $70,000/year, single filer, 2026 figures, no state tax, no voluntary deductions: gross pay $2,692.31. Pre-tax deductions: $0 (baseline). Federal income tax: $252.69. Social Security: $166.92. Medicare: $39.04. State tax: $0. Net pay: $2,233.66.
Now add reality: $150 in 401(k) and $85 in health premiums come off the top, so federal taxable wages drop to $2,457.31 and the federal line falls to roughly $229. Total withholdings become about $435 and net pay about $2,022. Every line on a pay stub — gross, each tax, each deduction, net — traces back to one of the steps above. If a number looks off, work the steps in order and the culprit usually reveals itself.
If you've ever compared paychecks with a coworker and found the numbers don't match, the steps above explain it. Same $70,000 salary, different state: the one in Texas keeps the full $2,233.66 while the one in California loses several more dollars per check to state tax. Same salary, different W-4s: one claims the standard deduction and two dependents, the other adds $100 of extra withholding per check — their federal lines differ by $100 every payday. Same salary, different benefits: heavier 401(k) and HSA contributions shrink taxable wages and every tax computed from them.
None of this is an error. Net pay is personal: it reflects your state, your W-4, and your benefits choices. The only numbers that must be identical between you and a coworker in the same state with the same W-4 are the flat FICA lines — 6.2% and 1.45% don't care about your choices.
Start with your pay stub: find gross pay, each tax line, and your net. Multiply each flat tax by the rate yourself — Social Security should be exactly 6.2% of your gross (or less if you've passed the $184,500 cap), Medicare exactly 1.45%. Those two lines are the easiest to verify and the ones employers get wrong least often.
For the federal line, run your numbers through a withholding calculator with your current W-4 settings and your year-to-date totals. Small rounding differences are normal; a federal line that's hundreds off from your own estimate is worth a question to HR — and if you find the W-4 on file is outdated, filing a new one takes effect within one or two pay periods. Catching a wrong W-4 in October beats discovering it as a balance-due notice in April.
Pre-tax deductions come out before taxes are computed — 401(k), HSA, and health premiums reduce the wage amount that federal, state, and FICA taxes apply to. Post-tax deductions (Roth 401(k), union dues, wage garnishments) come out after taxes and don't reduce the tax bite.
It depends on your income, pay frequency, state, W-4, and deductions. As a worked example: a $70,000 salary paid biweekly, single filer in 2026 with no state tax, loses about $458.65 per $2,692.31 check to federal income tax, Social Security, and Medicare — roughly 17%. State tax and benefits change the number from there.
The common causes: a pay raise moved more of your income into a higher bracket, you crossed the $184,500 Social Security cap (that line drops to zero), your year-to-date wages passed $200,000 (additional 0.9% Medicare kicks in), or payroll updated the annual withholding tables. An unchanged W-4 can still produce changing withholdings.
Yes, at 6.2% of each paycheck, until your year-to-date wages reach $184,500 in 2026. After that the Social Security line stops for the rest of the year. Medicare at 1.45% has no cap and is withheld from every paycheck all year.
Yes. Overtime wages are ordinary wages — federal income tax, Social Security, and Medicare are withheld from overtime at the same rates as regular pay. There's no special higher 'overtime tax'; overtime just adds dollars, and some of those dollars may land in a higher marginal bracket.
Yes — file a new Form W-4 with your employer. You can adjust it to have more withheld (add a dollar amount per check, useful if you owe at tax time) or less (claim all the deductions you're entitled to). It usually takes effect within one or two pay periods, and you can file a new W-4 any time.