Introduction
Understanding paycheck deductions is crucial for managing personal finances, especially in a high-tax state like New York. These deductions reduce your gross pay, encompassing federal, state, and local taxes, as well as additional payroll-related contributions. Knowing how these deductions impact your take-home pay ensures better financial planning and fewer surprises on payday.
Whether you’re new to the workforce or looking to optimize your paycheck, this guide provides a detailed breakdown of each type of deduction and their influence on your net income. By the end, you’ll have a clearer understanding of where your earnings go and how to estimate your take-home pay accurately.
Key Deductions
- Federal Taxes: Income tax, Social Security, and Medicare.
- New York State Taxes: Progressive income tax based on earnings.
- Local Taxes: Additional levies for NYC and Yonkers residents.
- Payroll Contributions: For programs like Paid Family Leave and Disability Insurance.
Federal Tax Deductions
Federal Income Tax
Federal income tax is one of the largest deductions from your paycheck. It is calculated based on the IRS’s 2025 tax brackets and individual elections on Form W-4. Factors that determine how much is withheld include:
- Filing Status: Single, married filing jointly, head of household, etc.
- Dependents: Claiming dependents can reduce taxable income.
- Additional Withholding: You may request extra withholding amounts to cover other tax liabilities.
The IRS updates tax brackets annually to account for inflation, which means withholding amounts may change slightly year over year. For the most accurate withholding, review your W-4 regularly and update it when major life changes occur, such as marriage or having children.
FICA Taxes
Federal Insurance Contributions Act (FICA) taxes fund Social Security and Medicare programs, which provide essential benefits for retirees, disabled individuals, and survivors.
- Social Security Tax: Employees pay 6.2% of their gross wages, up to the wage base limit of $167,700 in 2025. Employers match this amount, contributing an additional 6.2%. Self-employed individuals pay the full 12.4%.
- Medicare Tax: Medicare taxes are calculated at 1.45% of all wages. High earners—those earning more than $200,000 (single filers) or $250,000 (married filing jointly)—pay an additional 0.9% on income exceeding these thresholds.
New York State Income Tax
New York has a progressive income tax system, meaning the more you earn, the higher your tax rate. Rates range from 4% for low-income earners to 10.9% for individuals with incomes over $25 million.
Determining State Withholding
Employers calculate New York State income tax withholding using:
- NYS Form IT-2104: Similar to the federal W-4, this form allows employees to indicate their filing status, number of allowances, and any additional amounts to withhold.
- New York State Withholding Tax Table: Updated annually, this table provides guidance for determining the correct amount of tax to deduct based on income and allowances.
Key Considerations
- State tax withholding may vary for part-year residents and non-residents who work in New York but live elsewhere.
- Additional income, such as bonuses, may be taxed at a higher supplemental rate.
Local Tax Deductions
New York City Income Tax
Residents of New York City are subject to an additional income tax, which is also progressive. Rates range from 3.078% to 3.876%, depending on income levels. Unlike state taxes, NYC taxes do not apply to non-residents, even if they work within city limits.
Yonkers Income Tax Surcharge
Yonkers residents face a surcharge on their state income tax liability. This surcharge helps fund local government operations and is calculated as a percentage of the taxpayer’s New York State tax.
- Residents: Pay a surcharge equal to 16.75% of their state tax liability.
- Non-residents: Those working in Yonkers pay a smaller surcharge, typically 0.5% of their wages earned within the city.
Additional Payroll Deductions
New York Paid Family Leave (PFL)
New York’s Paid Family Leave program provides job-protected, paid time off for qualifying family events, such as caring for a sick relative or bonding with a newborn. In 2025:
- Employees contribute a small percentage of their wages.
- Contributions are capped annually; for 2025, the maximum deduction is $399.43.
- Benefits are calculated based on a percentage of the employee’s average weekly wage, up to a maximum set by the state.
State Disability Insurance (SDI)
New York requires employees to contribute to a short-term disability insurance program, which provides benefits for non-work-related injuries or illnesses. Contributions are typically a small fixed percentage of wages, with an annual cap around $60.
Other Potential Deductions
Pre-Tax Retirement Contributions
Contributing to employer-sponsored retirement plans, such as 401(k), 403(b), or similar programs, reduces your taxable income. For 2025:
- The contribution limit for 401(k) plans is $22,500 (or $30,000 for those aged 50 and older).
- Contributions are deducted before federal, state, and local taxes are applied, offering immediate tax savings.
Health Insurance Premiums
Many employers offer health insurance plans with premiums deducted on a pre-tax basis. This reduces taxable income and lowers overall tax liability.
Flexible Spending Accounts (FSAs)
FSAs allow employees to set aside pre-tax dollars for qualified medical or dependent care expenses. In 2025:
- The contribution limit for healthcare FSAs is $3,050.
- Funds must generally be used within the plan year, though some plans allow limited carryovers.
How to Calculate Net Pay in New York
Formula for Net Pay
Net Pay = Gross Pay – (Federal Taxes – State Taxes – Local Taxes – Payroll Deductions – Other Deductions)
Example Calculation
- Gross Pay: $5,000/month.
- Federal Income Tax: $500.
- Social Security: $310.
- Medicare: $72.50.
- State Tax: $400.
- NYC Tax: $150.
- PFL and SDI: $20.
- Pre-Tax 401(k): $300.
Net Pay: $5,000 – ($500 + $310 + $72.50 + $400 + $150 + $20 + $300) = $3,247.50.
Online Resources for Estimating Paychecks
To calculate your take-home pay, these tools provide accurate and user-friendly estimates:
These resources consider federal, state, and local taxes as well as payroll deductions to help you estimate your net earnings.
Conclusion
New York’s combination of federal, state, and local taxes significantly impacts take-home pay. Understanding these deductions allows employees to better anticipate their net earnings and make informed financial decisions. By leveraging pre-tax contributions and staying informed about tax rates, you can optimize your paycheck and plan effectively for the future. For accurate paycheck estimates, use online calculators or consult with a tax professional.
FAQs
How much tax is deducted from a paycheck in NY weekly?
Weekly deductions vary based on income, filing status, and location. Use a paycheck calculator for precise amounts.
How can I calculate my net paycheck in New York?
Subtract federal, state, local taxes, and other deductions from your gross pay. Reference the example calculation above.
What is the Social Security and Medicare deduction rate in NY?
Social Security: 6.2% (up to the wage base limit). Medicare: 1.45%, with an additional 0.9% for high earners.
Is there a difference in paycheck deductions for salaried vs. hourly workers in NY?
The calculation process is the same, but total deductions depend on gross earnings.
Can I reduce my paycheck tax deductions with pre-tax contributions?
Yes, contributions to retirement accounts, health insurance, and FSAs reduce taxable income and, consequently, tax liability.
