Payroll Tax Withholding Explained

Every tax line on a pay stub follows a published rule. Some are flat percentages, some follow a table, and some stop partway through the year. This guide shows how each one is figured for 2026, with numbers you can check.

The taxes on a typical stub

Line	Rate or method	Cap or threshold	Set by
Federal income tax	IRS Pub. 15-T tables applied to the W-4	None	IRS
Social Security	6.2% of wages	Stops at $184,500 of wages in 2026	Law, indexed yearly
Medicare	1.45% of wages	No cap	Law
Additional Medicare	0.9%	On wages over $200,000 in the year	Law
State income tax	State tables or formula	Varies	Your state
Local income tax	City or county rules, e.g. New York City, Yonkers	Varies	Locality
State disability or family leave	e.g. California SDI, New York SDI and PFL	Varies	Your state

Federal income tax, step by step

Employers with payroll software use Worksheet 1A in Publication 15-T. Here it is for a single filer paid $2,000 biweekly in 2026, with no W-4 entries beyond Step 1:

Step	Calculation	Result
1. Annualize the pay	$2,000 × 26 pay periods	$52,000
2. Add Step 4(a) other income	none	$52,000
3. Subtract Step 4(b) deductions plus the standard amount	$8,600 for single or head of household, $12,900 for married filing jointly, or $0 if the Step 2 box is checked	$43,400
4. Find the annual tax	Single table: $1,240 plus 12% of the amount over $19,900	$4,060
5. Divide by pay periods	$4,060 ÷ 26	$156.15
6. Subtract Step 3 credits per period	none	$156.15
7. Add Step 4(c) extra withholding	none	$156.15

The $8,600 subtraction and the 0% band at the bottom of the table together reproduce the $16,100 standard deduction for single filers in 2026. When the Step 2 box is checked, the subtraction drops to zero and the brackets are half as wide. That's why the same $2,000 paycheck withholds $270.19 with the box checked.

Withholding is an estimate of the year's tax, spread across paychecks. It's recalculated every period from that period's pay, which is why an overtime week withholds more than a regular week.

Social Security: 6.2% until the wage base

Social Security is 6.2% of wages until the employee's wages from that employer reach $184,500 in 2026 ($176,100 in 2025). After that it stops for the rest of the calendar year.

Example: a $200,000 salary paid biweekly is $7,692.31 per paycheck. By the end of pay date 23, year-to-date wages are $176,923.13. On pay date 24 only $7,576.87 is still under the cap, so Social Security is $469.77 instead of the usual $476.92. For pay dates 25 and 26 it's $0, and net pay rises by about $477.

Someone with two jobs can have more than the maximum withheld, because each employer withholds up to the cap separately. The IRS lets them claim the excess as a credit on their income tax return.

Medicare and Additional Medicare

Medicare is 1.45% of all wages, with no cap. On top of that, the employer must withhold 0.9% Additional Medicare Tax on wages paid to an employee above $200,000 in a calendar year, starting with the pay period in which wages cross $200,000. The employer doesn't match it.

Example: a $260,000 salary paid semimonthly is $10,833.33 per paycheck. Pay date 19 takes year-to-date wages from $194,999.94 to $205,833.27, so Additional Medicare applies to $5,833.27, which is $52.50. Pay dates 20 through 24 each withhold $97.50.

The withholding threshold is $200,000 for everyone, regardless of filing status. The tax actually owed is settled on the employee's return.

State and local lines

State	What appears on the stub
Texas, Florida	No state income tax line
California	State income tax from the DE 4, plus SDI at 1.3% of wages in 2026 (1.2% in 2025), with no wage cap
New York	State income tax; New York City or Yonkers tax where it applies; SDI of 0.5% of wages, at most $0.60 a week; Paid Family Leave of 0.432% of wages in 2026, capped at $411.91 for the year
Other states	Your state's withholding, per its own forms and tables

On PayStubShop stubs we calculate Texas, Florida, California and New York. For any other state, you enter the state and local withholding from your payroll records. We don't show a silent $0 that a reviewer could mistake for a real figure.

What the employer pays that isn't on the stub

• A matching 6.2% Social Security (up to the wage base) and 1.45% Medicare
• Federal unemployment tax (FUTA): 6.0% of the first $7,000 of each employee's wages, reduced to 0.6% with the full state credit
• State unemployment tax at the employer's assigned rate

The withheld amounts and the employer's share are deposited with the IRS, reported on Form 941 each quarter, and summarized per employee on the W-2.

Check any stub in a minute

• Social Security ÷ gross Social Security wages should be 6.2%, unless the wage base was reached.
• Medicare ÷ Medicare wages should be 1.45%, or 2.35% on the portion above $200,000.
• Federal tax should move when pay moves. A flat federal amount on varying hourly pay is a red flag.
• YTD tax totals should equal the sum of the period amounts.

Our pay stub generator runs all of this, using the 2025 and 2026 Publication 15-T percentage method, and shows every line on a free preview.