Understanding Your Paycheck
A line-by-line breakdown of a typical US paycheck — what each deduction means and how to spot errors.
Gross Pay
The top line — your total earnings before any deductions. For a salaried employee paid biweekly, this is your annual salary divided by 26. For hourly workers, it is hours worked multiplied by your hourly rate, including any overtime.
Federal Income Tax
Calculated based on your W-4 selections and the IRS withholding tables. This is your estimated federal income tax per pay period. If this seems too high or too low, update your W-4 with your employer. Use our W-4 calculator to estimate the correct amount.
Social Security (OASDI)
6.2% of your gross pay, up to $176,100 in 2025. Once your year-to-date earnings reach the cap, this deduction stops for the rest of the year. You may see it labeled as OASDI (Old-Age, Survivors, and Disability Insurance).
Medicare
1.45% of all gross pay with no cap. If your YTD earnings exceed $200,000, an additional 0.9% Medicare surtax kicks in. Unlike Social Security, Medicare never stops being deducted.
State and Local Tax
If your state has income tax, it appears here. Rates range from under 3% to over 13%. City taxes (e.g., NYC, Philadelphia) may appear as a separate line. Nine states have no income tax.
Pre-Tax Deductions
These reduce your taxable income: 401(k) contributions, health insurance premiums, HSA/FSA contributions, and commuter benefits. They come out before tax is calculated, saving you money.
Post-Tax Deductions
Roth 401(k) contributions, life insurance, union dues, garnishments, and disability insurance. These come out after tax — they do not reduce your taxable income.
Net Pay
The bottom line — what actually hits your bank account. This is gross pay minus all deductions. Use our salary calculator to estimate your net pay for any salary.
Frequently Asked Questions
Why is my first paycheck smaller than expected?
Your gross salary divided by pay periods gives the gross per check, but federal tax, FICA (7.65%), state tax, and any pre-tax deductions (401k, health insurance) are subtracted before you receive it.
What does YTD mean?
Year-To-Date — the total accumulated amount for that category since January 1 of the current year.
Why do I have two Medicare lines?
One is the standard 1.45% Medicare tax. If you earn over $200,000, a second line appears for the 0.9% Additional Medicare Tax.
Important Disclaimer
The figures provided by this calculator are estimates based on the information you enter and published rates at the time of writing. They do not constitute financial, tax, or legal advice, and we accept no liability for decisions made on the basis of these estimates. Your actual liability may differ depending on your individual circumstances, applicable reliefs, and any changes to rates or legislation. Always consult a qualified professional or check the latest IRS guidance at irs.gov before making financial decisions.