Knowing your tax amounts per paycheck comes in handy during financial planning and budgeting. The amount you must pay per tax depends on various factors, such as whether you’re hourly or salaried, and whether there’s been a change in your wages or deductions. The type of tax is also important, as each tax has its own calculation.
Hourly Versus Salaried
If you’re paid by the hour, your weekly hours and wages might vary. This change in wages causes your tax deductions to change; the more you earn, the more tax you pay; the less you earn, the less tax you pay. If you’re on a fixed salary, your tax deductions stay the same unless you have a change in your salary or deductions. As an example, if you stop your health insurance deductions, your gross pay increases -- and so do your tax amounts.
Federal Income Tax
Federal income tax is the only employment tax that concretely allows you to control the amount of tax that comes out of your paychecks. This tax depends on the number of allowances and filing status you put on your W-4. Allowances reduce your taxable wages and, ultimately, your tax liability. Also, if you claim married filing status on the W-4, it puts you in a lower tax bracket than single status. Let’s say you earn a weekly salary of $610. On line 3 of the W-4, you claim married status. You also claim an allowance for yourself, one for your child who is also your dependent, and two for child tax credit. This gives you four allowances on line 5. Page 40 of the 2012 Circular E says you would pay $17 in federal income tax. If you didn’t have a child as your dependent, you wouldn’t qualify for the related allowances. This would leave you with one allowance for yourself, and your federal income tax liability would be $41.
As of 2012, you pay 4.2 percent in Social Security tax up to $110,100 for the year, and 1.45 percent in Medicare tax. These two taxes are also called FICA taxes, as are mandated by Federal Insurance Contributions Act. Your deduction amounts for FICA taxes do not change unless your wages fluctuate or the tax percentages change.
State income-tax paycheck deduction rules depend entirely on your state of employment. A few local governments also charge employees who live or work in a taxing jurisdiction local income tax. Consult the state revenue agency for state and local income tax rates, if applicable. In some states, like federal income tax withholding, you can control your state tax amounts. In other cases, flat rates apply. The following states don’t require that employees pay income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming. Also, if you live in one state but work in another, you might be subject to income taxes in both states. An exception applies if a reciprocal agreement exists between the two states; in this case, you would pay income tax only to your home state.
Your tax deductions per paycheck also depend on your pay frequency. For example, if you’re paid daily, you’ll pay taxes more frequently than if you were paid weekly. It might seem like you’re paying more taxes daily, but the amount balances out with what you would pay if you were paid on a weekly basis.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.