What Are the Standard Payroll Deductions?

The W-4 form helps employers determine employees’ tax rates.
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Standard payroll deductions include those required by law, called statutory deductions. Federal, state and local governments levy taxes on wages and salaries. Employers then must withhold the appropriate amounts from each employee's paycheck. In addition, many workers consent to voluntary deductions from wages.

Federal Income Taxes

Federal income taxes top the list of standard payroll deductions. Workers complete Form W-4 when beginning a new job to provide employers with the number of withholding allowances. Allowances typically include one for the taxpayer and one for each dependent the taxpayer will claim on his income tax return. The employer uses this number, along with the employee's marital status, to compute the amount of federal income tax to deduct each pay period.


The Federal Insurance Contributions Act mandates that workers help finance the national system for senior citizen benefits and hospital insurance. Employers show FICA taxes on pay stubs and W-2 forms as Social Security and Medicare taxes, both standard payroll deductions. Both are based on the employee's income. In 2015, the Social Security withholding tax rate is 6.2 percent, for Medicare, the rate is 1.45 percent. The employer matches these contributions before remitting the taxes to the federal government.

State and Local Taxes

All but seven states levy an income tax of their own. In addition, many local municipalities and districts have an occupational tax, meaning that if you work in their district, you must pay a tax. These are standard payroll deductions when applicable for your geographic location. Some jurisdictions also require workers to contribute to state workers' compensation and disability insurance through a payroll tax.

Common Voluntary Deductions

Many employed individuals contribute to some type of deferred compensation plan such as an employer-sponsored pension plan, a 401(k) retirement plan or an Individual Retirement Account. In addition, health insurance premiums shared between the employer and employees are commonplace. Deductions for retirement accounts, savings plans, and healthcare insurance vary by employee.

Automatic Savings

Some workers choose to contribute a portion of earnings regularly to a personal savings account in a bank or credit union. Through the employee's directive, these are often set up as payroll deductions, which reduce net pay but not gross income. Because the employee opts for this reduction in take-home pay, this is categorized as a voluntary deduction.