Your Paycheck

Congratulations on getting your first paycheck! Like most of us, you probably immediately look at what your take home pay is. Confused about what you thought you'd be getting versus what you actually received? We are here to help explain.

• Taxes (Federal, State, Local)
• Social Security
• Medicare

Taxes-Federal, State, Local & More

Every employer has their own method of how a paystub will display. However, they all have the same basic deductions common across all employers.

• Federal Income Tax
  This is dependent on the number of exemptions you claimed when you filled out your W-4 after being hired. The federal tax amount is what you owe to the government, based on what you made, your marital status, and payroll frequency.This money goes to pay for things like federal defense, unemployment insurance, assistance for low-income families, school meals, national debt and more.
• State Tax
   In addition to a federal W-4 being filled out, you will also usually have to fill out a state withholding form. This will affect the state payroll tax deduction rate on your salary.Money from state taxes pays for things like education, transportation, public assistance, corrections, state police, parks and recreation.
• Local Tax
  Certain cities will often impose a local tax, in addition to state taxes. If you are a resident of New York City or Yonkers, you will see a local tax taken out of your paycheck.Local taxes pay for local programs and services that help keep the city running.
• Social Security
  The taxes for Social Security are often a flat 6.2% of your income. Your employer is also contributing the same amount to Social Security taxes.These dollars are used to pay benefits to retirees, families of workers who have died, people with disabilities and assistance with Medicare Part B.
• Medicare
  Another flat rate here of 1.45% of your salary. Again your employer is also contributing the same amount to the government.Medicare tax pays for the Medicare part A insurance that you will be able to use once you turn 65.
• Disability
  NY is one of the states that requires employers have disability insurance and they will often have the employee pay this out of their deductions.

Voluntary Deductions

In addition to the mandatory deductions we have mentioned, you may see other deductions on your paycheck which are voluntary. Often these are pre-tax deductions.

Some of these deductions might include:

• Insurance (medical, dental, vision and/or life)
• Parking fees
• Transportation, such as a metro pass
• 401K
• Flex spending account

It's important to take these possible deductions into account when negotiating the salary of a new job, as they will decrease your amount of take home pay.