Published on: Monday, 05 18 July 2025
Every worker in the United States pays tax on salary in USA. These deductions include federal income tax, state tax, Social Security tax, and Medicare tax. The amount deducted depends on income level, state residency, and filing status.
This article explains all the taxes deducted from salaries, how to calculate them, and ways to reduce taxable income. For deeper insights into tax planning for wealthy individuals, you might find this guide useful: Best Tax Strategies for Rich People.
Understanding Tax on Salary in USA
Workers across the USA have a portion of their salary withheld for taxes before they receive their paycheck. These taxes fund essential services like education, healthcare, and infrastructure. The major types of salary deductions are:
- Federal income tax – Tax deducted by the U.S. government.
- State income tax – Tax deducted at the state level (some states don’t charge this).
- Social Security tax – Retirement benefits tax.
- Medicare tax – Health insurance tax.
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How Federal Tax on Salary in USA is Calculated
The Internal Revenue Service (IRS) sets tax rates annually. The tax rates for 2024 are:
| Tax Rate | Income Range (Single Filers) |
|---|---|
| 10% | $0 – $11,600 |
| 12% | $11,601 – $47,150 |
| 22% | $47,151 – $100,525 |
| 24% | $100,526 – $191,950 |
| 32% | $191,951 – $243,725 |
| 35% | $243,726 – $609,350 |
| 37% | $609,351 and above |
The IRS applies these rates progressively, meaning only income above each bracket is taxed at the higher rate.
State Tax on Salary in USA
Each state has different tax rules. Some states charge high income tax, while others do not charge any salary tax.
States with the Highest Tax on Salary in USA
The highest state income tax rates are:
- California – Up to 13.3%
- Hawaii – Up to 11%
- Oregon – Up to 9.9%
- Minnesota – Up to 9.85%
- New York – Up to 10.9%
States with No Tax on Salary in USA
Some states do not charge state income tax, meaning workers keep more of their salary:
- Florida
- Texas
- Nevada
- Washington
- South Dakota
- Tennessee
- Wyoming
Payroll Taxes: Social Security and Medicare
Apart from federal and state taxes, workers pay payroll taxes:
- Social Security Tax: 6.2% of salary (applies to earnings up to $168,600 in 2024).
- Medicare Tax: 1.45% of salary (no income limit).
- Additional Medicare Tax: 0.9% applies to earnings above $200,000.
Employers match these taxes, meaning they also contribute 6.2% for Social Security and 1.45% for Medicare. For long-term wealth building, smart savings strategies can help reduce taxable income: Become a Millionaire by Saving.
Common Misconceptions About Tax on Salary in USA
There are many myths about salary tax deductions. Let’s address a few:
1. Does Earning More Mean Higher Taxes?
Not necessarily! The tax system is progressive, meaning only the amount above each tax bracket is taxed at the higher rate.
2. Are Late Taxes Punishable by Jail?
No, but late tax filings result in penalties. The IRS usually charges fines for late payments rather than sending people to jail.
3. Are State and Federal Taxes the Same?
No, federal taxes apply nationwide, while state taxes depend on your location.
How to Calculate Tax on Salary in USA?
Employees can estimate tax deductions using online calculators. Reliable websites include:
How to Reduce Tax on Salary in USA?
Workers can legally reduce tax deductions with financial planning strategies.
1. Increase Pre-Tax Retirement Contributions
Contributions to 401(k) and IRA accounts lower taxable income. In 2024, individuals can contribute up to $23,000 to a 401(k) plan.
2. Claim Deductions
Deductions reduce taxable income. Common deductions include:
- Student loan interest
- Home mortgage interest
- Medical expenses
- Charitable donations
Use Tax Credits
Tax credits directly lower the tax amount owed. Popular tax credits include:
- Earned Income Tax Credit (EITC)
- Child Tax Credit
- American Opportunity Credit (education expenses)
File Taxes Efficiently
Filing jointly with a spouse or choosing the right tax status can reduce tax liabilities.
For more details, visit:
Frequently Asked Questions (FAQs) About Tax on Salary in USA
1. What is Tax on Salary in USA?
Tax on salary in USA refers to the amount deducted from an employee’s paycheck for federal, state, Social Security, and Medicare taxes. These taxes help fund government programs, including healthcare, defense, public infrastructure, and social security benefits.
2. How is Federal Tax on Salary in USA Calculated?
The Internal Revenue Service (IRS) sets progressive tax brackets every year. Your salary is taxed at different rates depending on your income range. Here are the 2024 federal tax brackets:
| Tax Rate | Income Range (Single Filers) |
|---|---|
| 10% | $0 – $11,600 |
| 12% | $11,601 – $47,150 |
| 22% | $47,151 – $100,525 |
| 24% | $100,526 – $191,950 |
| 32% | $191,951 – $243,725 |
| 35% | $243,726 – $609,350 |
| 37% | $609,351 and above |
Federal income tax is progressive, meaning higher earnings are taxed at higher rates. However, only the portion above each bracket is taxed at the respective rate.
3. How Much State Tax is Deducted from Salary in USA?
State income tax varies by state. Some states charge high taxes, while others don’t tax salaries at all.
High Tax States:
- California: Up to 13.3%
- New York: Up to 10.9%
- Oregon: Up to 9.9%
- Minnesota: Up to 9.85%
- Hawaii: Up to 11%
No Tax States:
The following states do not charge state income tax, meaning workers keep more of their salary:
- Florida
- Texas
- Nevada
- Washington
- South Dakota
- Tennessee
- Wyoming
4. What Are Social Security and Medicare Taxes?
Apart from federal and state tax, workers pay Social Security and Medicare taxes, which fund retirement and healthcare benefits.
FICA Tax Rates:
- Social Security Tax: 6.2% of salary (up to $168,600 in 2024).
- Medicare Tax: 1.45% of salary (no limit).
- Additional Medicare Tax: 0.9% (on salaries above $200,000).
Employers match the employee’s contributions, meaning businesses also pay Social Security and Medicare tax.
5. How Can I Lower My Tax on Salary in USA?
Employees can legally reduce their tax burden using financial planning strategies:
Tax Reduction Strategies:
✔ Contribute to Pre-Tax Retirement Accounts (401(k), IRA) to lower taxable income.
✔ Claim deductions for student loans, home mortgage interest, medical expenses, and charitable donations.
✔ Utilize tax credits such as Earned Income Tax Credit (EITC), Child Tax Credit, and Education Credits.
✔ Choose the right filing status (married couples filing jointly often receive tax benefits).
6. What Is the Difference Between Deductions and Credits?
✔ Deductions reduce taxable income (example: mortgage interest).
✔ Tax credits directly reduce tax owed (example: Child Tax Credit).
7. How Do I Calculate My Salary After Taxes?
Employees can estimate their take-home salary using tax calculators:
8. Does Higher Income Mean Higher Taxes?
Yes, but only the portion above each tax bracket is taxed at the higher rate. The progressive system prevents individuals from paying higher taxes on their entire salary.
9. Can I Get a Tax Refund?
Yes! If employees overpay taxes, they can file a tax return and claim deductions or credits to receive a refund from the IRS.
10. What Happens If I Pay Taxes Late?
The IRS may charge penalties and interest on late payments. Jail time only applies to tax fraud or evasion, not late filings.
11. Are Federal and State Taxes the Same?
No. Federal tax applies nationwide, while state tax varies by location. Some states have high income tax, while others do not charge state tax.
12. Is It Possible to Avoid Salary Tax Completely?
No. However, employees can legally lower taxable income using deductions, tax credits, and retirement contributions.
13. Does Filing Status Affect Tax on Salary in USA?
Yes! Your filing status impacts tax rates:
✔ Single: Standard tax rates apply.
✔ Married Filing Jointly: Lower tax rates for couples filing together.
✔ Married Filing Separately: Couples file separately (can result in higher taxes).
✔ Head of Household: Single individuals with dependents qualify for lower tax rates.
14. Why Does My Paycheck Have Multiple Tax Deductions?
Employers withhold multiple taxes from every paycheck:
✔ Federal Tax (IRS income tax).
✔ State Tax (varies by state).
✔ Social Security Tax (retirement benefits).
✔ Medicare Tax (healthcare).
✔ Other Deductions (retirement accounts, insurance, union fees).
15. What Is FICA Tax?
FICA (Federal Insurance Contributions Act) tax includes Social Security and Medicare deductions. Employees pay 7.65%, and employers match the contribution.
16. Where Can I Learn More About Tax on Salary in USA?
You can refer to reliable sources for tax guidance: