How Much Is Taken Out of My Paycheck in NH?
Understand what reduces your New Hampshire paycheck. Learn about federal, state, and voluntary deductions to gain clarity on your take-home pay.
When you receive a paycheck, the amount you earn, known as your gross pay, is typically not the amount you take home. Various deductions are subtracted from your gross earnings to arrive at your net pay, or take-home pay. These deductions can originate from federal requirements, state-specific rules, or voluntary choices you make as an employee.
Federal Payroll Withholdings
Federal payroll withholdings represent mandatory deductions from nearly every employee’s paycheck across the United States. These include federal income tax and contributions to Social Security and Medicare, collectively known as FICA taxes.
Federal income tax withholding is determined by the information provided on your W-4 form, which you complete for your employer. This form guides your employer on how much federal income tax to deduct based on your filing status, whether you have multiple jobs or a working spouse, and any credits or additional withholding amounts you specify. Proper completion of the W-4 helps align the amount withheld throughout the year with your actual tax liability, aiming to prevent either a large tax bill or a substantial refund at tax time.
Social Security tax, officially known as Old-Age, Survivors, and Disability Insurance (OASDI), funds retirement, disability, and survivor benefits. The employee contribution rate for Social Security is 6.2% of wages, and this tax applies only up to a certain annual wage base limit, which is $176,100. Medicare tax, which finances hospital insurance for the elderly and disabled, has an employee contribution rate of 1.45% of all wages, with no wage base limit.
An additional Medicare tax of 0.9% applies to wages exceeding certain thresholds, specifically $200,000 for single filers and $250,000 for married couples filing jointly. Employers are required to begin withholding this additional tax in the pay period when an employee’s wages exceed $200,000 in a calendar year, regardless of the employee’s filing status. There is no employer match for this additional Medicare tax.
New Hampshire Tax Landscape for Paychecks
New Hampshire has a distinct tax landscape when it comes to payroll deductions, particularly concerning state income tax on wages. Unlike most states, New Hampshire does not impose a general state income tax on wages or salaries for W-2 employees.
While employees do not see state wage income tax deductions, employers in New Hampshire are responsible for contributing to the state’s unemployment insurance (SUI) program. This employer-paid tax helps fund benefits for eligible individuals who become unemployed through no fault of their own. Other state-specific taxes, such as those on interest and dividends, exist in New Hampshire but are not typically deducted from an employee’s regular W-2 paycheck. Therefore, the absence of a state wage income tax is a primary characteristic distinguishing New Hampshire paychecks.
Common Voluntary and Other Deductions
Beyond federal and state-mandated withholdings, many employees also have voluntary or other required deductions taken from their paychecks. These deductions can be categorized as either pre-tax or post-tax, impacting how they affect your taxable income. Pre-tax deductions are subtracted from your gross pay before taxes are calculated, effectively reducing your taxable income. This can lead to lower amounts owed for federal income tax and, in some cases, Social Security and Medicare taxes.
Common pre-tax deductions include contributions to employer-sponsored health insurance premiums, which reduce the income subject to federal taxation. Contributions to traditional retirement plans like a 401(k) or 403(b) are also typically pre-tax, allowing your money to grow tax-deferred until retirement. Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) permit employees to set aside pre-tax money for qualified medical expenses, further reducing taxable income.
Post-tax deductions are withheld from your paycheck after all applicable taxes have been calculated and deducted. These deductions do not reduce your taxable income. Examples often include contributions to a Roth 401(k), where contributions are made with after-tax dollars but qualified withdrawals in retirement are tax-free.
Other common post-tax deductions can involve loan repayments, such as for a 401(k) loan or a company loan. Union dues, if applicable, are also typically withheld on a post-tax basis. Additionally, wage garnishments, which are court-ordered deductions for obligations like child support or tax levies, are mandatory post-tax deductions.
Understanding Your Pay Stub
Your pay stub serves as a detailed record of your earnings and deductions for a specific pay period. The pay stub typically outlines several key components that summarize how your gross earnings are transformed into your net take-home pay.
You will find your gross pay, which is your total earnings before any deductions, and your net pay, the amount deposited into your bank account. Federal withholdings will be itemized, often appearing as Federal Income Tax (FIT), Social Security (SS), and Medicare (Med). For New Hampshire employees, a line item for state income tax withholding will likely show zero, reflecting the absence of a state wage income tax. Furthermore, any pre-tax deductions like health insurance premiums or retirement contributions, and post-tax deductions such as Roth 401(k) contributions or union dues, will be clearly listed. Examining your pay stub allows you to verify that your withholdings and deductions align with your expectations and financial planning.