Why is my first paycheck at a new job so small?

Two reasons: it may cover only a partial pay period, and payroll often withholds at a higher rate until your W-4 is fully processed. It usually normalises by the second or third cheque.

How much of my paycheck goes to taxes?

For most middle incomes, expect roughly 20–35% of gross to disappear before it hits your bank — about 7.65% to FICA, then federal income tax, plus state tax if your state has one.

Does a 401(k) contribution lower my taxes?

A traditional 401(k) contribution is taken out before federal income tax is calculated, so it lowers your taxable pay and your withholding now. A Roth 401(k) is taken after tax, so it does not.

What is FICA on my pay stub?

FICA is the combined 7.65% for Social Security (6.2%) and Medicare (1.45%). It is mandatory and separate from income tax.

Why Is My Paycheck Smaller Than My Salary? Every Deduction Explained (2026)

If your offer letter says $60,000 but your bank sees closer to $3,900 a month, nothing is wrong — that gap is the difference between gross pay (the headline salary) and net pay (what actually lands). Four things stand between them: FICA, federal income tax, state tax and your own pre-tax benefits. This guide walks through each line on a US pay stub; to see your exact numbers, run them through the paycheck calculator.

Gross pay vs net pay

Gross pay is your salary before anything is taken out — annual salary divided by the number of pay periods (24 if you are paid twice a month, 26 if every two weeks). Net pay, or take-home, is what remains after taxes and deductions. The distance between the two is usually 20–35% of gross, and it comes from these pieces.

FICA: Social Security and Medicare

FICA is the most predictable deduction because the rate is flat. It is 6.2% for Social Security (up to an annual wage cap) plus 1.45% for Medicare (no cap), for a combined 7.65%. High earners pay an extra 0.9% Medicare surtax on wages above $200,000. Your employer quietly matches your Social Security and Medicare, but that half never appears on your stub.

Federal income tax withholding

This is the big, variable one. The US uses progressive brackets: the first slice of taxable income is taxed at 10%, the next at 12%, then 22%, and so on — only the income within each band is taxed at that band's rate. So your effective rate (total tax ÷ total income) is always lower than the top bracket you touch. How much your employer withholds depends on the Form W-4 you filed: your filing status, dependents, and any extra withholding you requested. Get the W-4 wrong and you either overpay all year (a big refund) or underpay (a bill in April).

State and local tax

State income tax is where two identical salaries produce very different take-home. Nine states have no state income tax at all — including Texas, Florida, Washington and Nevada — while California and New York run progressive state brackets on top of federal. Some cities (New York City, parts of Ohio and Pennsylvania) add a local income tax as well. This is the single biggest reason a $60,000 salary feels different in Austin than in Manhattan.

Pre-tax deductions that shrink your taxable pay

Not every deduction is a tax. Several come out before income tax is calculated, which lowers the pay the government can tax:

Traditional 401(k) — retirement savings, taken pre-tax; lowers this year's taxable income
Health, dental and vision premiums — usually pre-tax
HSA / FSA — money set aside for medical costs, pre-tax

Post-tax deductions (Roth 401(k), disability insurance, wage garnishments) come out after tax and do not reduce what you owe. The distinction matters: a dollar into a traditional 401(k) costs you less than a dollar of take-home, because it dodges income tax on the way in.

A worked $60,000 pay stub

A single filer earning $60,000, no state income tax, no 401(k), paid twice a month — rough annual picture:

Line	Amount / year
Gross salary	$60,000
FICA (7.65%)	−$4,590
Federal income tax (≈ effective 10–11%)	−$6,100
State income tax (no-tax state)	$0
Net take-home	≈ $49,300 (~$2,054 per cheque)

Move that same salary to a state with a 5% income tax and you lose roughly another $2,300 a year. Add a $300/month 401(k) and your take-home falls now but your taxable income drops too. The take-home pay calculator lets you toggle state, filing status and 401(k) to see the trade-offs.

How to keep more of it

Fix your W-4. A giant refund means you lent the government money interest-free all year. Adjusting your W-4 puts that cash in each paycheck instead.
Use pre-tax accounts. 401(k), HSA and FSA contributions lower your taxable income today.
Know your state. If you are choosing between job offers in different states, compare net pay, not gross — the headline number can be misleading.

None of these deductions are a mistake or a scam — they are how income tax, retirement and healthcare are funded from wages. But understanding each line means you can make deliberate choices about the ones you control, instead of just watching a third of your salary vanish each month.