How Much Tax Is Deducted From a Minnesota Paycheck?

A portion of an individual’s earnings is routinely withheld from each paycheck before the funds are deposited. This process, known as tax withholding, ensures income tax obligations are met consistently throughout the year, rather than requiring a single large payment at tax filing time. Withholding contributes to the “pay-as-you-go” system of taxation, which helps fund various government services and programs.

Federal Income Tax Withholding

Federal income tax is a primary deduction from an employee’s gross pay, calculated based on a progressive tax system. Employers determine the amount to withhold using information provided by the employee on Form W-4, Employee’s Withholding Certificate. The Internal Revenue Service (IRS) provides withholding tables, such as those found in Publication 15-T, which employers utilize with W-4 information to calculate the precise withholding amount.

The W-4 form considers factors such as the employee’s filing status, which determines the applicable standard deduction and tax rates. The updated W-4 form, introduced in 2020, no longer uses withholding allowances. Instead, it focuses on adjustments for dependents, other income, and itemized deductions.

The federal income tax withheld from paychecks is remitted by the employer directly to the U.S. Treasury. This systematic collection helps individuals avoid a large tax bill at the end of the year and may even result in a refund if too much tax was withheld. Conversely, under-withholding can lead to a tax liability when filing the annual return.

Minnesota Income Tax Withholding

Minnesota operates a progressive income tax system. To determine the correct amount of Minnesota state income tax to withhold, employers rely on the Minnesota Form W-4MN, Minnesota Employee Withholding Allowance/Exemption Certificate. Employees are required to complete this form when they start a new job or whenever their personal or financial circumstances change.

The W-4MN form allows employees to indicate their withholding preferences. While the federal W-4 no longer uses traditional allowances, the Minnesota W-4MN still incorporates allowances. Claiming an appropriate number of allowances helps align the amount withheld with the expected annual tax liability.

Specific elections on the W-4MN can influence the state income tax withheld. Employees with multiple jobs or a working spouse may choose to adjust their allowances to prevent under-withholding. The form also provides sections for claiming exemption from Minnesota withholding. Any state income tax deductions are sent to the Minnesota Department of Revenue.

Social Security and Medicare Taxes

Federal law mandates the withholding of Federal Insurance Contributions Act (FICA) taxes, which fund Social Security and Medicare programs. These are distinct from income taxes and contribute to future retirement, disability, and healthcare benefits. FICA taxes are split between the employee and employer, with each paying a portion.

For Social Security, the employee and employer each contribute 6.2% of wages, totaling 12.4%. This tax applies only up to a certain annual wage base limit, which is $176,100 for 2025. Wages earned above this threshold are not subject to Social Security tax. For Medicare, the employee and employer each pay 1.45% of all covered wages, for a total of 2.9%, with no wage base limit.

An Additional Medicare Tax of 0.9% applies to individual wages exceeding $200,000 in a calendar year. This additional tax is withheld from the employee’s wages only, without an employer matching contribution. Employers are responsible for beginning this additional withholding once an employee’s wages surpass the $200,000 threshold within the year.

Understanding Influences on Withholding Amounts

Several factors directly influence the amount of tax withheld from a paycheck. The choices made on federal Form W-4 and Minnesota Form W-4MN are key determinants. Selecting a “Married Filing Jointly” status on the W-4 leads to less withholding than “Single.”

On the federal W-4, individuals can account for multiple jobs or a working spouse by checking a designated box or using estimator tools. Claiming dependents on the W-4 also reduces withholding, as it factors in potential tax credits. Employees can choose to have extra withholding deducted or account for other income not subject to withholding, or for additional deductions they expect to claim.

Pre-tax deductions reduce the amount of income subject to federal and state income taxes. Contributions to qualified retirement plans and Health Savings Accounts (HSAs) are subtracted from gross pay before income taxes are calculated. Pre-tax health or dental insurance premiums can also lower taxable income. This reduction in taxable income results in less income tax being withheld from each paycheck.

The frequency of pay affects the per-paycheck withholding amount. An employee paid weekly will have tax calculations spread over 52 pay periods, while someone paid bi-weekly will have calculations spread over 26 periods. While the annual tax liability is unchanged, the amount withheld from each paycheck will vary based on how frequently it is received.

Verifying Your Paycheck Deductions

Regularly reviewing your pay stub ensures the correct amounts are being withheld for federal income tax, Minnesota income tax, and FICA taxes. Each pay stub details gross pay, deductions, and net pay. Comparing these figures to previous pay stubs and your expectations helps identify any discrepancies.

Common reasons for discrepancies include incorrect settings on your W-4 or W-4MN forms, changes in income, or data entry errors by the payroll department. If you notice a significant difference or an unexpected deduction, contact your employer’s human resources or payroll department. They can clarify the deductions and make any necessary adjustments.

Maintaining personal records of your W-4 and W-4MN elections, along with any benefit selections that result in pre-tax deductions, assists in this verification process. If issues persist or remain unresolved, consulting a qualified tax professional can provide further guidance and help ensure your withholding is accurate.