Out of your paycheck, taxes are taken for various purposes, including federal, state, and local taxes, as well as Social Security and Medicare taxes. These deductions are made to ensure that you are contributing to the necessary programs and services provided by the government and other organizations. Here is a breakdown of the taxes taken out of your paycheck:
- Federal Income Tax : This tax is based on your income and filing status, and it is used to fund various government programs and services. The federal income tax brackets for 2022 are 10%, 12%, 22%, 24%, 32%, 35%, and 37%
- State Income Tax : Depending on your state of residence, you may also be required to pay state income tax. The rates and brackets vary by state, and the revenue is used to fund state-specific programs and services
- Local Income Tax : In some cases, you may also be required to pay local income tax, which is used to fund local services and programs
- Social Security and Medicare Taxes (FICA) : These taxes are deducted from your paycheck to fund the Social Security and Medicare programs. The FICA taxes consist of 1.45% for Medicare and 6.2% for Social Security, with a wage base limit of $160,200 for Social Security
- Additional Medicare Tax : If you earn over $200,000, you may be subject to an extra 0.9% Medicare tax, paid only by the employee and not the employer
To calculate the exact amount of taxes taken out of your paycheck, you can use online paycheck calculators, such as the ones provided by ADP
, SmartAsset
, or Forbes Advisor
. These calculators take into account your income, filing status, number of dependents, and other factors to provide an accurate estimate of your take- home pay.
