How much of your paycheck goes to taxes?

But what you might not know is how the amounts that get shaved off your paycheck are calculated.

Here is the rundown on where the money that’s deducted goes, and what you can do — besides enlisting the help of tax software — to make sure you get the highest possible amount of it back on when you file your taxes.

More: File for free with TurboTax Free Edition. ~37% of taxpayers qualify. Simple Form 1040 returns only (no schedules except for Earned Income Tax Credit, Child Tax Credit and Student Loan Interest).

What is federal income tax withholding?

Every time you get a paycheck, your employer withholds, or sets aside, taxes based on the information you provided on your Form W-4 when you first started your job.

Your Form W-4, also known as your Employee’s Withholding Certificate, provides financial details that allow your employer to deduct the correct amount of federal income tax from your pay.

If not enough federal tax is withheld, you’ll owe the IRS money and may have to pay a penalty, depending on the size of the shortfall. If too much is deducted, you’ll be owed a tax refund.

When any big changes happen in your life — you get married, have a child, or get a big raise, for example — you will need to update and resubmit your W-4 to your employer so your paychecks can be adjusted accordingly.

In recent years, the IRS redesigned Form W-4, and the changes have meant disappointing refunds for some taxpayers. Even if your financial situation stayed the same in 2021, H&R Block recommends that you review your W-4 on a regular basis.

Some of the changes to Form W-4 included the elimination of withholding allowances, one new blank for income that doesn’t come from jobs, and another that allows you to factor in likely deductions.

How much federal tax is deducted from your paycheck?

The actual amount of federal income tax that’s deducted from your paycheck is based on your income and information from your W-4, such as whether you file as a single person or with your spouse, and whether you’re claiming any dependents.

The calculation also takes into account the tax brackets your income falls into. Under America’s progressive tax system, chunks of your income are taxed at different rates.

2023 tax brackets

These are the federal tax brackets for the taxes you’ll file in 2023, on the money you made in 2023:

• Income amounts up to $11,000 (singles) / $22,000 married couples filing jointly): 10%
• Income amounts over $11,001 / $22,001: 12%
• Income amounts over $44,726 / $89,451: 22%
• Income amounts over $95,376 / $190,751: 24%
• Income amounts over $182,101 / $364,201: 32%
• Income amounts over $231,251 / $462,501: 35%
• Income amounts over $578,126 / $693,751: 37%

What is FICA?

Another deduction that you’ll likely see on your paycheck is for the Federal Insurance Contribution Act (FICA).

Your FICA tax contributions are shared between you and your employer and support the Social Security and Medicare programs that you’ll rely on during your senior years.

For each paycheck, 6.2% is deducted for Social Security taxes, which your employer matches. You pay the tax on only the first $160,200 of your earnings in 2023; any income exceeding that amount will not be taxed.