U.S. Payroll Deductions Explained

Decode the difference between pre-tax and post-tax deductions so you can forecast your net paycheck accurately.

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Why payroll deductions matter

Employers subtract a mix of taxes, benefit premiums, and voluntary contributions from every paycheck. Knowing which line items are pre-tax versus post-tax lets you model real take-home pay and maximize employer benefits. This overview focuses on U.S. payroll mechanics and pairs well with city-level calculators for precise withholding estimates.

Pre-tax deductions that lower taxable income

  • 401(k) and 403(b) retirement contributions
  • Health Savings Account (HSA) and Flexible Spending Account (FSA) deposits
  • Employer-sponsored health, dental, and vision insurance premiums
  • Commuter benefits and transit passes (up to IRS monthly limits)
  • Dependent care assistance programs

These deductions come out before federal income tax (and often before state income tax), lowering gross income and reducing withholding.

Payroll taxes you cannot avoid

  • Social Security (6.2% up to the annual wage base)
  • Medicare (1.45%, plus 0.9% additional Medicare tax for high earners)
  • State unemployment insurance (employer-paid but can influence withholding)
  • Local payroll taxes in certain jurisdictions (e.g., New York City, San Francisco)

These are mandated statutory taxes. Use PaycheckCalculate city pages to see precise percentages applied in each location.

Post-tax deductions that come after withholding

  • Roth 401(k) or Roth IRA contributions made via payroll
  • Wage garnishments (child support, student loans, tax levies)
  • Union dues and certain charitable contributions
  • Supplemental insurance policies (life, disability) not treated as pre-tax benefits

Post-tax deductions do not reduce taxable income but still impact take-home pay. Track them separately when comparing offers.

How to plan your deductions

Start by reviewing your most recent pay stub to see current deduction amounts. Then, model adjustments with PaycheckCalculate’s tools:

Checklist before accepting an offer

  1. Clarify which benefits are pre-tax, post-tax, or employer-paid.
  2. Estimate contributions you plan to make (401(k), HSA, commuter, etc.).
  3. Use PaycheckCalculate to model net pay with the assumed deduction mix.
  4. Request written confirmation of employer matches and coverage caps.
  5. Re-run the model after your first paycheck to verify actual withholding.

With a clear map of deductions, you can negotiate benefits from a position of strength and avoid surprises on your first payroll cycle.