Paycheck Deductions Guide: What's Being Taken Out

January 20, 2026 · 7 min read

The first time you compare your salary to your actual paycheck, the missing money can be a shock. A pay stub is a dense list of abbreviations, and each line is a deduction pulling your gross pay down toward your take-home amount. This guide decodes every common line so you know exactly where your money goes — and which deductions actually benefit you.

Two big categories: pre-tax and post-tax

Deductions fall into two groups, and the difference matters a lot. Pre-tax deductions come out of your pay before income tax is calculated, which lowers your taxable income and therefore your tax bill. Post-tax deductions come out after taxes and don't change what you owe. Sandwiched between them are the mandatory taxes themselves.

Mandatory taxes

Federal income tax — withheld based on your W-4 and the IRS brackets. This is usually the largest single deduction. See our brackets guide for how it's figured.
Social Security (often labeled "OASDI" or "FICA") — 6.2% of your wages, up to the 2026 wage base of $184,500. It funds retirement and disability benefits you'll later draw on.
Medicare — 1.45% of all wages with no cap, plus an extra 0.9% on high earnings above $200,000 (single) or $250,000 (married filing jointly).
State income tax — varies by state; nine states withhold none. Some cities and counties also levy a local income tax.
State disability/paid-leave (SDI, PFML) — a small mandatory deduction in a handful of states such as California, New York, and New Jersey.

Pre-tax deductions that lower your taxes

These are the deductions worth maximizing, because every dollar you route through them is a dollar the IRS doesn't tax today:

Traditional 401(k) / 403(b) — retirement contributions taken out before income tax. They reduce your federal (and usually state) taxable income, though not your Social Security or Medicare wages. Many employers match a percentage — that match is free money.
Health, dental, and vision premiums — your share of employer-sponsored insurance is typically pre-tax under a Section 125 "cafeteria" plan.
Health Savings Account (HSA) — for those on a high-deductible health plan, HSA contributions are triple tax-advantaged: pre-tax going in, tax-free growth, and tax-free withdrawals for medical costs.
Flexible Spending Account (FSA) — pre-tax money set aside for medical or dependent-care expenses, with a use-it-or-lose-it rule.
Commuter/transit benefits — pre-tax dollars for qualified transit and parking.

Post-tax deductions

These come out after taxes are calculated, so they don't lower your tax bill:

Roth 401(k) contributions — you pay tax now so withdrawals in retirement are tax-free. A deliberate trade-off, not a tax break today.
Disability or life insurance — premiums for coverage beyond what your employer provides are often post-tax (which can make the eventual benefit tax-free).
Union dues, charitable giving, and stock-purchase plans — typically deducted after tax.
Wage garnishments — court-ordered amounts for child support, unpaid debts, or taxes, taken after withholding.

Reading your pay stub

A typical stub shows gross pay at the top, then taxes, then other deductions, then net pay at the bottom — usually with both a "current" column for this period and a "year-to-date" (YTD) column for the totals so far this year. Watch the YTD figures: they're how you confirm you're on track to max out a 401(k), and how you'll spot when you hit the Social Security wage base and that 6.2% deduction stops for the rest of the year.

Why two people with the same salary take home different amounts

Two coworkers earning identical salaries can have very different paychecks. One might contribute 10% to a 401(k), pay family health premiums, and live in a high-tax state; the other might contribute nothing, take single coverage, and live somewhere with no income tax. Their gross pay is the same, but their deductions — and therefore their take-home pay — diverge sharply. This is exactly why a calculator that accounts for your specific deductions beats a rule-of-thumb percentage.

See your deductions itemized

The TakeHomePay.live calculator lets you enter pre-tax and post-tax deductions alongside your wage, then shows each tax and deduction as its own line so your estimate mirrors a real pay stub. To understand the full path from gross to net, read how to calculate your take-home pay, and to control the biggest deduction of all, see our W-4 withholding guide.