Automatic payroll deductions fall into three groups: taxes your employer is required to withhold, benefits and other items you signed up for in writing, and court- or agency-ordered garnishments your employer has no choice but to honor. Each group has its own rules on how much can come out, when your consent is needed, and what your employer has to do with the money afterward. Getting any of it wrong can cost you money or expose your employer to steep penalties.
Taxes Your Employer Must Withhold
Federal income tax, Social Security tax, and Medicare tax come out of every paycheck without any pay-period-by-pay-period approval from you. Your Form W-4 tells your employer how to calculate federal income tax withholding based on filing status, dependents, other income, and any extra amount you want held back. You can submit a new W-4 any time your situation changes, and your employer must apply it going forward.1Internal Revenue Service. Topic No. 753, Form W-4, Employees Withholding Certificate
Social Security and Medicare
FICA is a fixed rate. Your employer withholds 6.2% of gross wages for Social Security and matches it, so the combined rate is 12.4%. For 2026, Social Security tax applies only to the first $184,500 you earn; wages above that are not subject to the tax for the rest of the year.2Social Security Administration. Contribution and Benefit Base
Medicare has no cap. Your employer withholds 1.45% of all wages, and once your pay crosses $200,000 in a calendar year, an additional 0.9% is withheld on the excess. That $200,000 trigger applies regardless of your filing status, and the extra 0.9% is not matched by the employer.3Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates4Internal Revenue Service. Topic No. 560 – Additional Medicare Tax
State and Local Income Tax
Most states also require state income tax withholding, usually calculated on a state form similar to the W-4. Nine states have no income tax, so there’s nothing for the employer to withhold at the state level in those places. Some cities and counties layer on their own local income tax withholding.
Deductions That Need Your Written Consent
Anything beyond required taxes is voluntary and needs your explicit written authorization spelling out the amount or percentage and where the money goes. You can generally revoke that authorization later, though timing depends on the type of deduction. Retirement deferrals can usually be changed whenever your plan allows; health premiums often can’t be changed mid-year.
Health, Dental, and Vision Premiums
Many employers run health premiums through a Section 125 cafeteria plan, which pulls the premium out of your pay before federal income tax and FICA are calculated. That lowers your taxable income and your Social Security and Medicare tax in the same paycheck.5Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans
The trade-off is flexibility. Section 125 elections are locked in for the plan year. You can change coverage mid-year only after a qualifying life event such as marriage, a birth, or loss of other coverage. Otherwise you wait for open enrollment.
401(k) and 403(b) Contributions
Retirement deferrals need a separate election. For 2026, you can defer up to $24,500. Workers age 50 and older can add a catch-up of up to $8,000, for a total of $32,500, and a higher catch-up of $11,250 applies if you are age 60 through 63.6Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
One point worth knowing: pre-tax 401(k) deferrals reduce your federal income tax withholding, but they are still subject to Social Security and Medicare tax. A Section 125 health premium reduces both; a traditional 401(k) contribution reduces only income tax.7Internal Revenue Service. Are Retirement Plan Contributions Subject to Withholding for FICA, Medicare, or Federal Income Tax Roth 401(k) contributions come out after all taxes, with tax-free qualified withdrawals in retirement.
Union Dues, Charity, Parking, and Loans
Union dues, charitable contributions, subsidized parking, and repayment of company loans all sit in the voluntary category too. Each needs its own written authorization. Your employer cannot start or change a voluntary deduction without documented consent, and skipping that paperwork can trigger a wage claim.
Garnishments and Levies
When a court or agency orders it, your employer has to comply. Failing to withhold on a valid garnishment can make the employer personally liable for the debt. Federal law caps how much can come out, and the cap depends on the type of debt.
Consumer Debts
For ordinary consumer debts like credit cards and medical bills, the Consumer Credit Protection Act limits garnishment to the lesser of 25% of your disposable earnings or the amount by which those earnings exceed 30 times the federal minimum wage. With the federal minimum at $7.25 per hour, the weekly protected amount is $217.50. Disposable earnings means what’s left after legally required deductions like taxes. The cap applies to the total across all consumer-debt garnishments, not to each one separately.8U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
Child Support and Alimony
Support orders get higher limits. If you are currently supporting another spouse or dependent child, up to 50% of disposable earnings can be garnished. If not, the limit is 60%. Either figure can go up by 5% if you are more than 12 weeks behind.9Office of the Law Revision Counsel. 15 U.S.C. 1673 – Restriction on Garnishment
IRS Tax Levies and Federal Student Loans
IRS wage levies are not bound by the 25% CCPA cap. The IRS calculates an exempt amount based on your standard deduction and dependents, and your employer sends everything above that to the IRS.10Internal Revenue Service. Information About Wage Levies Administrative garnishments for defaulted federal student loans also sit outside the CCPA cap: the Department of Education can order withholding of up to 15% of disposable pay without going to court.8U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
Multiple Orders at Once
Federal law does not set a priority order when an employer holds several garnishments at the same time. The CCPA only sets the ceiling on total withholding; state law and the issuing courts decide who gets paid first. In practice, child support almost always jumps to the front of the line, and combined withholding still cannot exceed the applicable CCPA limit.
What Employers Cannot Deduct, Even With Consent
Written authorization is not a blank check. Some deductions are illegal no matter what you signed.
The Minimum Wage Floor
Under the Fair Labor Standards Act, no deduction that benefits the employer can push your effective pay below the federal minimum wage of $7.25 per hour, and no deduction can cut into earned overtime. This covers uniforms, tools, equipment, cash register shortages, and any other employer-required expense. The rule applies even if you signed an agreement allowing the deduction.11U.S. Department of Labor. Fact Sheet 16 – Deductions From Wages for Uniforms and Other Facilities Under the FLSA
Employers cannot sidestep this by asking you to reimburse them in cash instead. If the economic effect is the same, the FLSA treats it the same.
Stricter State Rules
Many states go further than the federal floor. Some prohibit deductions for cash shortages, damaged property, or business losses unless the employer can prove dishonesty or gross negligence. Others require a separate, standalone written authorization for any employer-benefit deduction, rather than a clause buried in an employment contract. Employers in multiple states have to apply the most restrictive rule that fits each employee’s location.
Final Paychecks
Deductions from a final paycheck get extra scrutiny. Some states allow an employer to take outstanding debts out of the last check if you authorized it in writing beforehand; others prohibit final-paycheck deductions entirely, even with prior consent. If your employer says you owe money for equipment or training when you leave, whether they can withhold it depends on your state’s wage payment law.
What Your Employer Has to Do With the Money
Withheld funds don’t belong to the employer. They belong to you, the IRS, the plan trust, or the creditor. The rules on getting the money where it belongs are strict, and the penalties for missing them can be personal.
Tax Deposit Deadlines
Federal income tax and FICA withholdings go to the IRS on either a monthly or semi-weekly schedule. Monthly depositors pay by the 15th of the following month. Semi-weekly depositors have just a few business days after each payday. Which schedule applies depends on total employment taxes reported during a lookback period: $50,000 or less means monthly, more than $50,000 means semi-weekly.12Internal Revenue Service. Topic No. 757, Forms 941 and 944 – Deposit Requirements
401(k) Contributions
Department of Labor rules require employers to deposit 401(k) deferrals into the plan trust as soon as they can reasonably be separated from company assets. The outer deadline is the 15th business day of the month after the pay date, but that is not a safe harbor. If the employer could have deposited sooner, the DOL expects sooner. Plans with fewer than 100 participants get a 7-business-day safe harbor.13Internal Revenue Service. 401(k) Plan Fix-It Guide – You Haven’t Timely Deposited Employee Elective Deferrals
The Trust Fund Recovery Penalty
When an employer withholds taxes and doesn’t send them in, the money is treated as a trust fund held for the government. Under 26 U.S.C. ยง 6672, a person responsible for paying over those taxes who willfully fails to do so faces a penalty equal to 100% of the unpaid amount. It’s personal. The IRS can assess it against owners, officers, or anyone with authority over company finances, not just the business itself.14Office of the Law Revision Counsel. 26 U.S.C. 6672 – Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax
Fixing Withholding Errors
If too much federal income tax was withheld, the fix generally has to happen in the same calendar year as the wages. Prior-year corrections are limited to administrative errors, such as when the quarterly return doesn’t match what was actually withheld. The employer files a corrected return using the appropriate “X” form (for example, Form 941-X) and either takes a credit or requests a refund.15Internal Revenue Service. Correcting Employment Taxes
Pay Stubs
Federal law does not require your employer to hand you a pay stub. The FLSA requires accurate hour and wage records, but an itemized statement to the employee is not a federal mandate.16U.S. Department of Labor. Fair Labor Standards Act Advisor Most states fill that gap, with rules ranging from requiring a detailed written statement each pay period to allowing electronic-only access. Either way, checking your deductions every pay period is the simplest way to catch errors early.