How Much Is Taken Out of My Paycheck in MD?

Understanding the various deductions taken from a paycheck is an important aspect of personal financial management. A paycheck reflects a detailed breakdown of amounts withheld for taxes, benefits, and other contributions. These withholdings significantly influence the net pay an individual receives, which is the actual amount available for spending and saving. Becoming familiar with these deductions helps individuals comprehend how their income is managed from gross earnings to take-home pay.

Federal Income Tax and Payroll Contributions

Federal income tax (FIT) is a mandatory deduction from an employee’s gross pay, calculated based on their Form W-4. This form helps employers determine the correct amount to withhold, reflecting factors such as filing status, multiple jobs, and dependents. The federal income tax system operates on a progressive scale, meaning higher income levels are subject to higher tax rates.

Beyond income tax, employees contribute to Federal Insurance Contributions Act (FICA) taxes, which fund Social Security and Medicare. Social Security is withheld at a rate of 6.2% of gross earnings up to an annual wage base limit. For 2025, this wage base is set at $176,100, meaning earnings above this amount are not subject to the Social Security tax.

Medicare is withheld at a rate of 1.45% of all earned income, with no wage base limit. An additional Medicare tax of 0.9% applies to earnings exceeding certain thresholds: $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married individuals filing separately.

The combined employee FICA tax rate is 7.65% (6.2% for Social Security and 1.45% for Medicare) on earnings up to the Social Security wage base. Only the 1.45% Medicare tax applies to earnings above that base, plus the additional 0.9% for high earners.

Maryland State and Local Income Taxes

Maryland residents also see deductions for state and local income taxes, which are distinct from federal withholdings. Maryland operates a progressive state income tax system, where tax rates increase with higher income levels. For the 2025 tax year, state income tax rates for individuals range from 2% to 6.5%. New higher tax brackets were introduced for high-income earners, with a 6.25% rate for taxable income between $500,001 and $1 million, and a 6.5% rate for income exceeding $1 million for single filers.

Maryland has local income taxes, which are collected by the state and distributed to counties and Baltimore City. This tax is determined by where an employee resides, not where they work. These local income tax rates vary significantly by county and municipality.

For 2025, local income tax rates in Maryland range from 2.25% to 3.3% of an individual’s state taxable income. The maximum rate counties are permitted to charge increased to 3.3% for 2025. These state and local taxes are mandatory withholdings for Maryland residents.

Other Common Paycheck Deductions

Beyond mandatory federal and state income taxes, various other deductions commonly appear on a paycheck. These can be categorized as either pre-tax or post-tax, depending on when they are subtracted from gross earnings relative to tax calculations. Pre-tax deductions reduce an individual’s taxable income, potentially lowering their overall tax liability.

Pre-tax deductions are taken from gross pay before federal, state, and sometimes FICA taxes are calculated. Common examples include contributions to employer-sponsored health insurance premiums, traditional 401(k) or 403(b) retirement plans, Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and commuter benefits.

In contrast, post-tax deductions are subtracted from an employee’s net pay, after all applicable taxes have been calculated and withheld. These deductions do not reduce taxable income. Examples of post-tax deductions include contributions to Roth 401(k) plans, premiums for certain disability or life insurance policies, union dues, wage garnishments for debts like child support or student loans, and charitable contributions made through payroll.

Factors Influencing Deductions and Understanding Your Pay Stub

Several factors directly influence the total amount of deductions taken from a paycheck. An individual’s gross pay is a primary determinant; higher earnings generally result in larger deductions due to progressive tax structures and fixed percentage rates. The choices made on the federal Form W-4 and corresponding state forms also significantly impact federal and state income tax withholdings. These forms allow individuals to specify their filing status, claim dependents, and elect additional withholding amounts.

The amount contributed to pre-tax deductions also plays a role in reducing taxable income. The frequency of pay, whether weekly, bi-weekly, or monthly, affects the per-paycheck deduction amounts. While the annual total of taxes and deductions may remain constant, the amount withheld from each individual paycheck will be adjusted based on the pay period.

To gain a clear understanding of their earnings and deductions, individuals should regularly review their pay stub. A typical pay stub itemizes gross pay, followed by a detailed list of all deductions, including federal income tax, Social Security, Medicare, Maryland state income tax, and Maryland local income tax. Any pre-tax and post-tax deductions for benefits or other contributions are also clearly listed. The remaining amount after all deductions is the net pay, which is the actual take-home amount.