How Do Payroll Deductions Work in Texas?
By Team SalaryCalculate · 7/23/2025
When you get your paycheck in Texas, it’s easy to focus on the final number—the money hitting your bank account. But before it gets there, a handful of payroll deductions have already happened behind the scenes. These deductions can include taxes, benefits, retirement contributions, and more.
Unlike states like California or New York, Texas doesn’t collect state income tax. That means your paycheck might feel a bit “lighter” on tax—but that doesn’t mean there are no deductions. Federal income tax, Social Security, Medicare, and potentially things like health insurance or 401(k) contributions are still in play. Depending on your situation, child support, wage garnishments, or union dues might also come out.
In this article, I’ll walk through exactly how payroll deductions work in Texas for 2025 and 2026—what’s required by law, what’s optional, and what you can do if you’re trying to take home more of your pay. If you’ve ever wondered, “what is withheld from my paycheck in Texas?”, this guide has your back.
What Are Payroll Deductions?
Payroll deductions are amounts taken out of your gross pay (your total earnings before deductions) to cover taxes, benefits, and other obligations. They fall into two main categories:
• Mandatory deductions – Required by law (like federal income tax).
• Voluntary deductions – Chosen by you (like retirement or health plans).
Mandatory Payroll Deductions in Texas
1. Federal Income Tax
This is the biggest slice for most people. The IRS uses your W-4 form, income level, and filing status to calculate how much should be withheld each paycheck. In 2025/26, federal tax brackets range from 10% to 37%. The more you earn, the more you're taxed.
📌 Tip: Use the net salary calculator to see how much federal tax is taken from your paycheck in real terms.
2. Social Security Tax
You pay 6.2% of your earnings toward Social Security, up to the wage base limit. For 2025, that cap is $168,600. Your employer matches this amount.
3. Medicare Tax
You also pay 1.45% of your pay toward Medicare. There’s no income cap. If you earn over $200,000 (single) or $250,000 (married filing jointly), you’ll pay an additional 0.9% in Medicare surtax.
| Tax Type | Employee Rate | Employer Rate | 2025 Cap |
| Social Security | 6.2% | 6.2% | $168,600 |
| Medicare | 1.45% | 1.45% | No limit |
| Additional Medicare | 0.9% (over $200K) | N/A | No limit |
4. Wage Garnishments (If Applicable)
Court-ordered deductions for unpaid debts, child support, or tax levies may reduce your paycheck. Employers are legally obligated to comply.
Voluntary Payroll Deductions
These are optional but often important parts of your financial life.
How It All Comes Together
Let’s break down a real-world example:
Alex earns $4,000/month in Texas. They contribute 5% to a 401(k), have a health plan that costs $300/month, and are single with no dependents.
| Item | Amount |
| Gross Pay | $4,000.00 |
| 401(k) Contribution (5%) | -$200.00 |
| Health Insurance | -$300.00 |
| Taxable Income | $3,500.00 |
| Federal Income Tax (~12%) | -$420.00 |
| Social Security (6.2%) | -$217.00 |
| Medicare (1.45%) | -$58.00 |
| Take-Home Pay | $2,505.00 |
You can run your own numbers with the net salary calculator.
For more strategies, see how to increase my takehome pay in Texas.
Common Payroll Deduction Mistakes
1. Not reviewing your pay stub
Errors happen. Always check for mistakes in tax, benefit, or garnishment deductions.
2. Ignoring your W-4
A W-4 that’s too conservative might lead to smaller paychecks—or a big refund at tax time. Update it after life changes.
3. Overlooking voluntary benefits
Sometimes you’re auto-enrolled in benefits you don’t use. It’s worth double-checking.
FAQs
Do I pay state income tax in Texas?
No. Texas does not have a state income tax.
Why are there still taxes taken from my paycheck?
Federal taxes and FICA (Social Security and Medicare) are still required.
Can my employer deduct without telling me?
Not legally. You must authorize voluntary deductions, and garnishments require official orders.
Is there a cap on how much can be deducted?
There’s no hard cap, but certain limits apply (like the $168,600 cap for Social Security).
Final Thoughts
Even though Texas skips state income tax, your paycheck still has a lot going on before it hits your account. Understanding payroll deductions helps you spot mistakes, plan smarter, and potentially take home more money.
Want to see how your own paycheck breaks down? Try our net salary calculator and run a few scenarios. It only takes a minute—and you might uncover ways to stretch your income further.
