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The short answer
A US paycheck usually shows federal income tax withheld (set by your Form W-4), Social Security at 6.2% and Medicare at 1.45% (together called FICA), state and sometimes local income tax, and deductions for benefits such as health insurance and a 401(k). For 2026, IRS Topic 751 says Social Security applies to wages up to $184,500, and an extra 0.9% Medicare tax applies to wages above $200,000.
Gross pay and net pay
Your offer letter quotes gross pay: the salary before anything is taken off. What lands in your bank account is net pay. The gap between them can be a shock on a first payslip, especially if you are used to Nigerian PAYE, where the employer also deducts tax and pension before you see the money but the categories are different. US payslips (pay stubs) list each deduction separately, so you can check every line.
The federal lines
Federal income tax withholding
This is an advance payment of your income tax for the year, calculated by your employer from the Form W-4 you completed when you started. If the W-4 is wrong, this figure will be wrong too, which shows up later as a tax bill or a large refund. Our guide to filling in a W-4 walks through each step.
Social Security and Medicare (FICA)
IRS Topic 751, reviewed on 24 September 2026, gives the employee rates:
| Tax | Employee rate | Applies to |
|---|---|---|
| Social Security | 6.2% | Wages up to $184,500 in 2026 |
| Medicare | 1.45% | All wages |
| Additional Medicare Tax | 0.9% | Wages above $200,000 in a calendar year, regardless of filing status |
Your employer pays a matching share of Social Security and Medicare, though the IRS notes there is no employer match for the Additional Medicare Tax. Once your wages for the year pass $184,500, the Social Security line stops for the rest of that calendar year. These contributions build your US Social Security record; see Social Security if you return to Nigeria.
State and local lines
Most states tax wages and your employer withholds that tax too, using the state's own form or your W-4. Some states have no income tax on wages, and some cities and counties add a local tax. The line may read "State", "SIT" or the state's abbreviation. If you live in one state and work in another, check that withholding is going to the right one. See which US states have no income tax.
Benefit deductions
- Health, dental and vision premiums: your share of the employer plan, often taken before tax.
- 401(k) or 403(b): retirement contributions you chose; many employers add a match. See should a new employee join the 401(k)?
- Flexible spending or health savings accounts, if offered.
- Life or disability insurance, sometimes free at a basic level, with optional extra cover deducted.
Pre-tax deductions reduce the wages that federal income tax is worked out on, so the "federal taxable wages" figure on your pay stub can be lower than gross pay. Some pre-tax deductions also reduce wages for FICA and some do not; the stub shows the wage base used for each tax.
Worked example
Example only, with invented withholding figures. Ngozi earns $4,000 gross in a monthly pay period. For simplicity, FICA is worked out here on the full $4,000.
| Line | Amount |
|---|---|
| Gross pay | $4,000.00 |
| Social Security (6.2%) | −$248.00 |
| Medicare (1.45%) | −$58.00 |
| Federal income tax withheld (example) | −$300.00 |
| State income tax withheld (example) | −$160.00 |
| Health insurance premium (example) | −$150.00 |
| 401(k) contribution, 5% (example) | −$200.00 |
| Net pay | $2,884.00 |
Deductions total $1,116, or 27.9% of gross. FICA alone is $306 (7.65%). The income tax figures depend on her W-4, state and pay, which is why two people on the same salary can see different net pay.
Pay frequency changes the picture
US employers pay weekly, every two weeks, twice a month or monthly. A salary paid every two weeks arrives in 26 payments a year, so two months each year contain three paydays. Budget on the amount of a single paycheck, not on a monthly figure divided from your annual salary, and treat the third paycheck in those months as a chance to top up savings or clear a bill. The worked example above uses a monthly period only to keep the arithmetic simple.
Where the year-end form comes from
Every deduction on your stubs feeds into the Form W-2 your employer issues after the year ends. The W-2 shows your wages and the federal, Social Security, Medicare and state amounts withheld, and it is the starting point for your tax return. Keep your final pay stub of the year to check the W-2 against it.
What to check on your first stub
- Your name and Social Security number are correct; a mismatch causes problems with your W-2 later.
- The filing status matches the W-4 you submitted.
- The state matches where you live and work.
- Benefit deductions match what you chose at enrolment.
- The year-to-date column starts from your first day, not from someone else's record.
Where Pryme fits
Your paycheck goes to a US bank account. Once you know your real net pay, decide how much to set aside for home before you send anything; our guide to budgeting before you send your first paycheck home works through it. When you do send, Pryme's Send shows the rate and the fee before you approve.
Questions people ask
What percentage is taken out of a US paycheck for Social Security and Medicare?
6.2% for Social Security (up to $184,500 of wages in 2026) and 1.45% for Medicare, per IRS Topic 751, plus 0.9% Additional Medicare Tax above $200,000.
Why is my first US paycheck so low?
Federal and state income tax, FICA and benefit deductions all come out of gross pay. Check each line against your W-4 and benefit choices.
Does my employer pay Social Security too?
Yes, employers pay a matching share of Social Security and Medicare, but there is no employer match for the Additional Medicare Tax.
What is FICA on my pay stub?
FICA is the combined Social Security and Medicare tax withheld from your wages.
Sources
- IRS Topic no. 751: Social Security and Medicare withholding rates (reviewed 24 Sep 2026) · accessed Oct 2026
- IRS Form W-4 (2026), Employee's Withholding Certificate · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.