Texas Paycheck vs W‑2 Income: What’s the Difference?
By Team SalaryCalculate · 7/23/2025
When you look at your paycheck in Texas, it often feels like money vanishes before it hits your bank. But when tax season rolls around and you see your W‑2, the numbers look different—and maybe even more confusing. So what’s really going on?
Your paycheck is your net pay—what you take home after deductions. Your W‑2 income is your gross income—the full amount you earned before taxes.
Many Texans ask: why is my Texas paycheck smaller than expected? The answer comes down to what’s deducted from your paycheck vs. what’s reported on your W‑2.
Let’s break it down, step by step.
Quick Definitions
| Term | What It Means |
| Paycheck | Your take-home pay after deductions |
| Gross Pay | Your total earned income before taxes/deductions |
| Net Pay | What you actually receive—your paycheck |
| W‑2 Income | Total taxable income your employer reports to the IRS |
Why Your Paycheck Doesn’t Match Your W‑2
Your paycheck reflects what’s left after deductions. Your W‑2 shows what your employer paid you in total. Here’s how they differ:
Let’s say you earn $70,000 annually. Your biweekly paycheck might show around $2,200. Why the difference? Because deductions happen first.
Common Paycheck Deductions
| Deduction | Typical Rate |
| Federal Income Tax | Varies by income and W-4 |
| Social Security | 6.2% |
| Medicare | 1.45% |
| 401(k) | Often 5–10% (optional) |
| Health Insurance | $100–$400/month |
Example Breakdown (2025)
Here’s a sample scenario for someone in Texas earning $70,000 a year, paid biweekly:
| Category | Amount |
| Gross pay (per check) | $2,692.31 |
| 401(k) contribution (6%) | -$161.54 |
| Health insurance | -$100.00 |
| Taxable income | $2,430.77 |
| Federal income tax | -$270.00 |
| Social Security | -$150.71 |
| Medicare | -$35.24 |
| Net Pay | $1,874.82 |
At the end of the year, their W‑2 shows $70,000 in wages, but only about $48,745 made it to their bank account.
What’s Included on Your W‑2?
Your W‑2 is a summary of your full year’s taxable earnings. Key boxes include:
| Box | What It Shows |
| Box 1 | Taxable wages, tips, bonuses |
| Box 3 & 5 | Wages subject to Social Security and Medicare |
| Box 12 | Retirement contributions like 401(k) |
| Box 14 | Other items like union dues, benefits, or sick pay |
What’s Left Off Your Paycheck
Several things shrink your paycheck but aren’t obvious day to day:
| Item | Effect |
| Pre-tax contributions | Lower your taxable income |
| FICA taxes | Mandatory Social Security & Medicare |
| Withholding choices | Based on W‑4 form settings |
| Other deductions | Union dues, wage garnishment, insurance |
Want to see the details? We explain what is withheld from my paycheck in Texas in more depth.
Why It Matters
Understanding this difference helps you:
| Reason | Why it’s useful |
| Budget smarter | Your paycheck is less than your salary |
| Avoid tax surprises | Know what to expect in April |
| Fine-tune your W‑4 | Withhold just the right amount |
| Plan retirement contributions | Maximize tax-free savings |
Common Misunderstandings
“I thought I made more last year…”
That’s common. Your W‑2 reflects full income, but your paycheck reflects deductions. You earned more than you took home.
“Texas doesn’t have state tax—so why is my paycheck still low?”
Even without state income tax, federal withholding, Social Security, and Medicare still take a big bite.
FAQs
Q: Does Texas have income tax on paychecks?
A: No, but you still pay federal tax, Social Security, and Medicare.
Q: Is W‑2 income before or after taxes?
A: W‑2 income is before tax. It’s your full taxable earnings.
Q: Can I avoid federal tax withholding in Texas?
A: Not unless you’re exempt. But you can adjust it with Form W‑4.
Q: Are bonuses included in my W‑2?
A: Yes. All taxable income—including bonuses—appears on your W‑2.
Q: Why is my W‑2 lower than my salary?
A: Pre-tax deductions like 401(k) or HSA reduce your W‑2 total.
Final Thoughts
Your paycheck shows what you keep. Your W‑2 shows what you earned. If the numbers don’t match, that’s normal.
Still confused? Use our net salary calculator or explore why your Texas paycheck might be smaller than expected.