Wednesday, May 10, 2023
HomeBankWhat Is Tax Withholding? - Chime

What Is Tax Withholding? – Chime


An illustrated chart breaks down the different types of tax and payroll withholdings.

Under is an summary of the varieties of taxes that would come out of your paycheck, that means taxes you should pay as an worker. Some taxes, like State Unemployment Tax (SUTA) and Federal Unemployment Tax Act (FUTA), are paid by your employer and never withheld out of your paycheck. 

Tax Worker pays Employer pays
Federal revenue tax
State tax, native revenue tax Is dependent upon location  Is dependent upon location 
Social Safety tax1 6.2% (the primary $160,200 of earnings in 2023) 6.2% (the primary $160,200 of earnings in 2023)
Medicare tax1 1.45% .45%
Federal unemployment tax (FUTA) 
State unemployment tax (SUTA)

Federal revenue tax

That is revenue tax that your employer withholds out of your paycheck and sends to the IRS in your title, and the way a lot is withheld primarily is dependent upon the data you present in your Kind W-4, comparable to your revenue, marital standing, and any dependents you might have.

State tax

For relevant states, state revenue tax is one other kind of revenue tax withheld out of your pay and despatched to your state by your employer. The quantity withheld is dependent upon your location, the place your job is, and some different components based mostly in your Kind W-4. 

Alaska, Florida, South Dakota, Nevada, Texas, Tennessee, and Wyoming don’t have revenue taxes.²

Native revenue or wage tax

Just like a state tax, your metropolis or county could impose an analogous revenue tax to cowl municipal prices like public transportation. 

Social Safety and Medicare taxes

Along with federal, state, and native revenue taxes, employers should typically additionally withhold Social Safety and Medicare taxes out of your paychecks. Every has completely different charges, and the Social Safety tax additionally has a wage base restrict (or how a lot of your wages are topic to being taxed). 

For 2023 Social Safety taxes, a tax charge of 6.2% is withheld on the primary $160,200. For 2023 Medicare taxes, the tax charge is 1.45%.¹

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments