What Are the Different Types of Paycheck Deductions?
The most common kinds of paycheck deductions are for taxes. In most cases, people in the United States will have four kinds of taxes deducted from their paychecks: FICA, federal income tax, state income tax, and local tax. Taxes vary from state to state and taxation systems outside of the United States differ in the ways that they levy taxes. FICA is short for “Federal Insurance Contributions Act” and serves to cluster taxes for Medicare and Social Security. Federal income taxes range between about 10 percent and 35 percent of one’s income. The percentage of one’s income that is deducted for federal income taxes varies depending on one’s income. People making the least amount of income have the smallest paycheck deductions for federal taxes while people making the largest amount have the largest paycheck deductions for federal income.