How Much Tax Is Deducted From a Paycheck in MN?

Paycheck deductions are a common aspect of employment. Understanding them is important for financial planning. Each pay period, a portion of an employee’s gross earnings is withheld, with taxes being a significant component. These deductions contribute to federal and state government services and social programs. This article explains the types of taxes typically deducted from paychecks in Minnesota and the factors that influence these amounts.

Federal Payroll Tax Deductions

Federal payroll taxes, applied nationwide, primarily include Federal Insurance Contributions Act (FICA) taxes and federal income tax withholding. FICA taxes fund Social Security and Medicare, which provide retirement, disability, and healthcare benefits. For 2025, employees contribute 6.2% of their earnings to Social Security, up to an annual wage base limit of $176,100. Earnings above this limit are not subject to Social Security tax.

The Medicare tax component of FICA is 1.45% of all taxable earnings, with no wage base limit. An additional Medicare tax of 0.9% applies to wages exceeding certain thresholds for high-income earners, such as $200,000 for single filers or $250,000 for married couples filing jointly. Employers match employee contributions for Social Security and Medicare, but not for the additional Medicare tax.

Federal income tax withholding is determined by IRS Form W-4, Employee’s Withholding Certificate. This form instructs employers on how much federal income tax to withhold from each paycheck based on factors like filing status, dependents, and any additional income or deductions an individual anticipates. Accurately completing the W-4 helps ensure that the correct amount of tax is withheld throughout the year, minimizing the likelihood of owing a large tax bill or receiving a substantial refund at tax time.

Minnesota State Payroll Tax Deductions

Employees in Minnesota have state-specific deductions. The primary state-level deduction is for Minnesota income tax withholding. Minnesota operates under a progressive income tax system, meaning higher earners pay a larger percentage of their income. The state’s income tax rates vary across several brackets, ranging from 5.35% for lower incomes up to 9.85% for higher income levels. Only the portion of income falling within a specific bracket is taxed at that bracket’s rate.

Similar to federal withholding, the amount of Minnesota income tax withheld is influenced by information provided to the employer, often through a state-specific withholding form or by using federal W-4 information. Minnesota does not levy widespread local income taxes, so state income tax is generally the main state-level income-based deduction. Other potential deductions include Minnesota Paid Family and Medical Leave contributions, which began in 2025.

Factors Affecting Your Withholding

Several individual factors influence the amount of tax deducted from a paycheck. Information provided on federal Form W-4 and any equivalent state forms plays a significant role. Adjustments to filing status, such as single or married, and the number of dependents claimed, directly impact the calculated withholding amount for both federal and state income taxes. Employees can also elect to have additional amounts withheld or account for other income sources and deductions.

Contributions to certain pre-tax accounts can reduce an individual’s taxable income, thereby lowering the amount of income tax withheld. Common examples include contributions to a 401(k) retirement plan, Flexible Spending Accounts (FSAs), and Health Savings Accounts (HSAs). Health insurance premiums paid through an employer’s plan are often pre-tax deductions as well, reducing the income subject to federal and state income taxes.

The frequency of payroll periods also affects the amount deducted per paycheck, even if the annual tax liability remains the same. For instance, a bi-weekly paycheck will have smaller individual deductions compared to a semi-monthly or monthly paycheck, as the annual tax amount is spread across more pay periods. When an employee receives supplemental wages like bonuses or commissions, these amounts may be subject to different withholding methods, sometimes at a flat rate, which can lead to a higher deduction on those specific paychecks.

Reviewing Your Paystub

Understanding your paystub helps verify that the correct amounts are being withheld. Paystubs typically list various deductions using common abbreviations. Federal income tax withholding may appear as “FWT,” “FIT,” or “FED Tax.” Social Security is often “FICA-SS” or “OASDI,” and Medicare as “FICA-MED” or “MEDFICA.” Minnesota state income tax withholding is commonly abbreviated as “MN IT” or “ST Tax.”

Your paystub distinguishes between gross pay (your total earnings before any deductions) and net pay (the amount you actually receive after all deductions). Many paystubs also provide year-to-date (YTD) totals for each deduction, allowing you to track your cumulative contributions and tax payments throughout the year. If you have questions or notice discrepancies on your paystub, contact your employer’s human resources or payroll department for clarification. Resources like the IRS Tax Withholding Estimator can help you assess if your federal withholding is appropriate for your financial situation. For Minnesota-specific tax information, the Minnesota Department of Revenue provides guidance and tools to help employees understand their state tax obligations.