How to Read Your Paycheck: A Breakdown of Every Deduction

Every paycheck has the same basic deductions, whether you earn $40,000 or $140,000 a year. Here is what each one means.

Federal Income Tax

This is calculated using progressive tax brackets - only the income within each bracket is taxed at that bracket's rate.

FICA (Social Security and Medicare)

Social Security is 6.2% up to an annual wage cap. Medicare is 1.45% with no cap, plus an extra 0.9% on high earners.

State Income Tax

Nine states do not tax wage income at all. The other 41 each have their own brackets and standard deductions.