How Much Is Taken Out of a Paycheck in California?

A paycheck reflects a detailed breakdown of deductions that reduce gross earnings to take-home pay. These deductions include mandatory contributions required by law and amounts an employee may voluntarily choose to have withheld. Understanding these components is important for managing personal finances.

Federal Paycheck Deductions

Federal income tax is a deduction from an employee’s paycheck, calculated based on information provided on the IRS Form W-4, Employee’s Withholding Certificate. This form guides employers on how much tax to withhold, considering factors like filing status, multiple jobs, or dependents. The federal income tax system operates on a progressive scale, meaning higher income levels are subject to higher tax rates. Employers use withholding tables to determine the appropriate amount to deduct each pay period.

The Federal Insurance Contributions Act (FICA) mandates contributions for Social Security and Medicare. Social Security tax is levied at a rate of 6.2% on an employee’s gross wages. For 2025, this tax applies only up to an annual wage base limit of $176,100.

Medicare tax is the other component of FICA, withheld at a rate of 1.45% of all gross wages. Unlike Social Security, there is no wage base limit for Medicare tax, meaning all earned income is subject to this deduction. An additional Medicare Tax of 0.9% applies to wages exceeding $200,000 for an individual, which employers are required to withhold. This additional tax is solely an employee responsibility, with no corresponding employer share.

California State Paycheck Deductions

California imposes its own state income tax, separate from the federal system, which is also characterized by a progressive tax structure. The amount withheld for state income tax depends on the information an employee provides on the California Form DE 4, Employee’s Withholding Allowance Certificate. This form allows employees to adjust their withholding based on their financial situation and the state’s tax brackets, aiming to align with their anticipated state tax liability.

California also requires mandatory employee contributions for State Disability Insurance (SDI). This program provides partial wage replacement benefits to eligible workers who experience a loss of wages due to a non-work-related illness or injury, or pregnancy. For 2025, the SDI contribution rate is 1.2% of an employee’s gross wages. Notably, there is no taxable wage cap for SDI contributions, meaning all covered wages are subject to this deduction.

Paid Family Leave (PFL) is another mandatory contribution in California, funded through the same SDI contributions. PFL provides benefits to workers who need to take time off to care for a seriously ill family member, bond with a new child, or manage a qualifying exigency related to a family member’s military deployment. The benefit rates for SDI and PFL have increased for 2025, generally providing 70% to 90% wage replacement, with the specific percentage dependent on the worker’s income. This unified contribution ensures that employees are covered for both their own disability and eligible family leave needs.

Other Common Paycheck Deductions

Many paychecks include pre-tax deductions, which reduce an employee’s taxable income for both federal and state purposes. Health insurance premiums are a common example, where the portion of the premium paid by the employee is excluded from taxable wages. This reduces the amount of income subject to federal and state income taxes, as well as FICA taxes.

Contributions to retirement plans like a 401(k), 403(b), or Traditional IRA also fall into the pre-tax category. These contributions are deducted from gross pay before income taxes are calculated, allowing the employee to defer taxes until retirement. Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) offer similar tax advantages, enabling employees to set aside pre-tax dollars for eligible healthcare or dependent care expenses. HSAs are available to individuals with high-deductible health plans and offer a triple tax advantage: contributions are pre-tax, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free.

In contrast, post-tax deductions are withheld from an employee’s pay after all applicable taxes have been calculated and subtracted. Roth retirement contributions, such as those to a Roth 401(k) or Roth IRA, are examples of post-tax deductions. While these contributions do not offer an immediate tax reduction, qualified withdrawals in retirement are entirely tax-free. This approach allows for tax-free growth and distribution, a significant benefit for long-term financial planning.

Other common post-tax deductions include repayments for company loans or 401(k) loans, which are deducted directly from an employee’s net pay. Union dues are also deducted post-tax. Similarly, voluntary charitable contributions may be deducted from net pay if an employer offers such a program.