Understanding Your Paycheck

Your paycheck has several deductions before you receive your take-home pay:

  • Federal income tax — Based on your taxable income and filing status (2025 brackets)
  • State income tax — Varies by state (0% in TX, FL, WA, NV, TN, SD, WY, NH, AK to 13.3% in CA)
  • Social Security — 6.2% of income up to $176,100 (2025)
  • Medicare — 1.45% of all income (+ 0.9% surtax above $200K)
  • 401(k) contributions — Pre-tax, reduces your taxable income
  • Health insurance — Usually pre-tax, varies by employer plan

How to Maximize Your Take-Home Pay

  • Contribute to a 401(k) — Reduces taxable income now; your future self will thank you
  • Use an HSA — Triple tax benefit if you have a high-deductible health plan
  • Claim all deductions — Student loan interest, education credits, child tax credit
  • Adjust withholding — If you get a large refund, you're giving the IRS an interest-free loan. Adjust your W-4.

States With No Income Tax

These 9 states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Living in a no-tax state can save you thousands per year.

Compare salaries across states with our Salary by State tool.