Your paycheck stub can be confusing with all its abbreviations and deductions. This guide explains every common deduction you'll see.
Mandatory Tax Deductions
These deductions are required by law and automatically withheld from your paycheck.
Federal Income Tax (FIT)
Based on your W-4 form electionsProgressive tax system (higher income = higher rate)Withheld throughout the year to cover your annual tax liabilityState Income Tax (SIT)
Varies by state (some states have no income tax)Also based on state W-4 or equivalent formRates range from 0% to over 13% depending on stateSocial Security Tax (FICA)
6.2% of your wagesOnly applies to first $168,600 of wages (2025 limit)Funds Social Security retirement and disability benefitsEmployer matches your contribution (another 6.2%)Medicare Tax (FICA)
1.45% of all wages (no limit)Additional 0.9% on wages over $200,000 (single) or $250,000 (married)Funds Medicare health insurance for seniorsEmployer matches the 1.45% portionPre-Tax Deductions
These deductions reduce your taxable income, saving you money on taxes.
401(k) Contributions
Retirement savings plan2025 limit: $23,000 ($30,500 if age 50+)Reduces current taxable incomeGrows tax-deferred until retirementTraditional IRA
Individual retirement account2025 limit: $7,000 ($8,000 if age 50+)May be tax-deductible depending on incomeTax-deferred growthHealth Savings Account (HSA)
For those with high-deductible health plans2025 limit: $4,300 (individual) or $8,550 (family)Triple tax benefit: deductible, grows tax-free, withdrawals tax-free for medicalFunds roll over year to yearFlexible Spending Account (FSA)
Use-it-or-lose-it account for medical expenses2025 limit: $3,200Pre-tax contributionsMust be used within plan year (with some exceptions)Health Insurance Premiums
Medical, dental, and vision insuranceUsually pre-tax through employerReduces taxable incomeEmployer often pays portion of premiumCommuter Benefits
Pre-tax dollars for parking and transit2025 limit: $315/month for parking, $315/month for transitSaves on taxes for work-related transportationPost-Tax Deductions
These come out after taxes are calculated.
Roth 401(k) Contributions
Retirement savings with after-tax dollarsSame contribution limits as traditional 401(k)Withdrawals in retirement are tax-freeGood for those expecting higher tax rates in retirementRoth IRA
After-tax retirement contributionsSame limits as traditional IRATax-free growth and withdrawals in retirementDisability Insurance
Provides income if you become disabledOften optional through employerPremiums may be pre-tax or post-taxLife Insurance
Term or whole life insurance through employerBasic coverage often freeAdditional coverage usually post-taxUnion Dues
Required for union membersPost-tax deductionMay be tax-deductible in some casesGarnishments
Court-ordered deductionsChild support, tax liens, student loans, etc.Taken after taxesUnderstanding Your Pay Stub
Common abbreviations you'll see:
**FIT/FWT**: Federal Income Tax/Withholding**SIT/SWT**: State Income Tax/Withholding**FICA**: Social Security and Medicare**OASDI**: Social Security (Old Age, Survivors, Disability Insurance)**YTD**: Year-to-Date totalsStrategies to Maximize Take-Home Pay
1. **Optimize W-4**: Don't over-withhold taxes
2. **Max Pre-Tax Deductions**: 401(k), HSA reduce taxable income
3. **Use FSA Wisely**: Plan for known medical expenses
4. **Review Benefits**: Ensure you're not paying for unused benefits
5. **Check for Errors**: Review pay stubs regularly
Conclusion
Understanding your paycheck deductions helps you make informed financial decisions. Use our calculator to see how different deductions affect your take-home pay.