How Much Tax Is Deducted From a Paycheck in Texas?
Understand federal tax deductions on Texas paychecks, including the unique absence of state income tax.
When you receive your paycheck in Texas, the amount deducted primarily consists of federal taxes. While the state of Texas does not impose its own income tax, federal income tax, Social Security, and Medicare taxes are still withheld from earnings. Understanding these deductions and how they are calculated can help individuals manage their take-home pay and financial planning.
Federal Tax Deductions
Federal income tax is a primary deduction, with the amount determined by the information provided on an employee’s Form W-4, Employee’s Withholding Certificate. This form dictates an individual’s filing status, any additional income, deductions, and credits, which then guide the employer in calculating the appropriate withholding. The federal income tax system is progressive, meaning higher income levels are subject to higher tax rates. Adjustments on the W-4 form, such as claiming dependents or specifying additional amounts to withhold, directly impact the federal income tax deduction from each paycheck.
In addition to federal income tax, Social Security and Medicare taxes, known as Federal Insurance Contributions Act (FICA) taxes, are mandatory federal deductions. The Social Security tax rate for employees is 6.2% of wages, up to an annual wage base limit, which is $176,100 for 2025. The Medicare tax rate for employees is 1.45% of all covered wages, with no wage base limit. An Additional Medicare Tax of 0.9% applies to wages exceeding certain thresholds: $200,000 for single filers and $250,000 for married couples filing jointly. Employers withhold this additional tax once an employee’s wages surpass $200,000 in a calendar year, regardless of their filing status.
Absence of Texas State and Local Income Taxes
Texas does not have a state-level individual income tax. This means no portion of an individual’s wages is withheld for state income tax purposes, unlike many other states. This can result in a higher net paycheck compared to states that levy an income tax.
Texas also does not have city or county income taxes deducted from paychecks. While local governments in Texas impose other taxes like property and sales taxes, these are not withheld from wages. Sales tax (up to 8.25% combined state and local) and property taxes are primary local tax burdens, but they do not directly reduce an individual’s paycheck through income tax withholding.
Understanding Your Pay Stub and Withholding
Reviewing your pay stub is an important step to understand how your earnings are calculated and what deductions are taken. Pay stubs list gross pay (earnings before any deductions) and itemize various withholdings. Common abbreviations for federal tax deductions include “FIT” or “FWT” for Federal Income Tax, “SS” or “OASDI” for Social Security, and “MED” or “HI” for Medicare. “Net Pay” is the final amount received after all deductions.
Individuals can adjust their federal income tax withholding by submitting a new Form W-4 to their employer. This adjustment fine-tunes the amount of federal income tax withheld, potentially leading to more take-home pay or a larger tax refund. The IRS provides a Tax Withholding Estimator, an online tool that helps individuals determine the appropriate withholding amount based on their specific financial situation. Using this tool and updating the W-4 form as life circumstances change, such as marriage, having a child, or taking on a second job, can help ensure tax obligations are met without over- or under-withholding.