Below is an overview of the types of taxes that could come out of your paycheck, meaning the taxes you have to pay as an employee. Some taxes, such as State Unemployment Tax (SUTA) and Federal Unemployment Tax Act (FUTA), are paid by your employer and are not withheld from your paycheck.
|Tax||the employee pays||the employer pays|
|State tax, local income tax||Depends on location||Depends on location|
|social security tax1||6.2% (first $160,200 of earnings in 2023)||6.2% (first $160,200 of earnings in 2023)|
|medicare tax1||1.45%||.Four. Five%|
|Federal Unemployment Tax (FUTA)||✅|
|State Unemployment Tax (SUTA)||✅|
This is the income tax that your employer withholds from your paycheck and submits to the IRS on your behalf, and the amount withheld depends primarily on the information you provide on your Form W-4, such as your income, filing status, and any dependent. have.
For applicable states, state income tax is another type of income tax withheld from your wages and sent to your state by your employer. The amount withheld depends on your location, where your work is, and a few other factors based on your Form W-4.
Alaska, Florida, South Dakota, Nevada, Texas, Tennessee, and Wyoming have no income tax.²
Local income or salary tax
Similar to a state tax, your city or county may impose a similar income tax to cover municipal costs like public transportation.
Social Security and Medicare taxes
In addition to federal, state, and local income taxes, employers generally must also withhold Social Security and Medicare taxes from your paychecks. Each has different rates, and Social Security tax also has a wage base limit (or how much of your salary is taxable).
For 2023 Social Security taxes, a 6.2% tax rate is withheld on the first $160,200. For 2023 Medicare taxes, the tax rate is 1.45%.¹