On a typical W-2 job, 7.65% of a 16-year-old’s paycheck is taken out for Social Security and Medicare, and that portion cannot be avoided. Federal income tax may also be withheld, but most 16-year-olds working part-time or summer hours owe nothing in federal income tax for the year and can either stop the withholding upfront or get it all refunded later. Whether more than 7.65% comes out of any given paycheck depends almost entirely on how the W-4 is filled out.
The 7.65% That Always Comes Out
Social Security and Medicare taxes, together called FICA, are the one payroll deduction a teen can’t get out of at a normal job. The employee share is 6.2% for Social Security and 1.45% for Medicare, for a combined 7.65% of gross wages.1Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide The employer pays a matching 7.65%, but that comes out of the employer’s pocket, not the teen’s. On a $500 paycheck, $38.25 goes to FICA before anything else is calculated.
There is one narrow exception. A child under 18 who works for a parent’s sole proprietorship, or for a partnership in which both partners are the child’s parents, is exempt from Social Security and Medicare withholding.2Internal Revenue Service. Family Employees The exemption disappears if the business is a corporation or if anyone besides the parents is a partner. For every other employer, the 7.65% is automatic and no form can reduce it.
Federal Income Tax: Usually Zero for the Year
Federal income tax is where the withholding math actually varies. A 16-year-old who can be claimed as a dependent gets a standard deduction equal to the greater of $1,350 or earned income plus $450, capped at the single-filer standard deduction of $16,100 for 2026.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
In practical terms, that means a teen whose only income is a paycheck and whose total 2026 wages stay at or below $16,100 has zero taxable income and owes zero federal income tax. A teen earning $8,000 for the year gets a standard deduction of $8,450, which wipes out the entire wage.
If earnings do climb above $16,100, only the amount over the deduction is taxed. The first $12,400 of taxable income for a single filer falls in the 10% bracket in 2026, and income above that up to $50,400 sits in the 12% bracket.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 A 16-year-old would need to earn roughly $28,500 before any of it is taxed at 12%, which is uncommon for part-time work.
So for most teens, the year-end federal income tax bill is zero. The trouble is that the employer doesn’t know that. Without instructions on the W-4, the employer withholds federal income tax from every paycheck as if the teen will owe on every dollar. That money isn’t lost, but it sits with the government until a return gets filed.
Stopping the Federal Withholding on the W-4
A 16-year-old who expects total 2026 wages to stay under $16,100 can claim exemption from federal income tax withholding on Form W-4. On the 2026 form, that means checking the “Exempt from withholding” box and completing only Steps 1(a), 1(b), and 5, leaving everything else blank.4Internal Revenue Service. Form W-4 (2026) To qualify, the teen must have had no federal income tax liability the prior year and expect none in the current year. A first-time worker meets the prior-year condition automatically.
Claiming exempt has no effect on FICA. The 7.65% still comes out of every check. What the exemption does is stop the federal income tax line from appearing, so the paycheck arrives closer to gross.
A few things to keep in mind:
- The exempt status expires each year. To keep it in place for 2027, a new W-4 must be submitted by February 16, 2027.4Internal Revenue Service. Form W-4 (2026)
- If earnings look likely to exceed $16,100, don’t claim exempt. Instead, complete Steps 1 and 5 normally and leave Steps 2 through 4 blank. That produces the lowest ordinary withholding.
- Claiming exempt without a reasonable basis can trigger a $500 civil penalty on top of any taxes owed.5eCFR. 26 CFR 31.6682-1 – False Information With Respect to Withholding
State and Local Deductions
State income tax runs on its own rules. Several states have no income tax at all, so no state line appears on the pay stub. Among states that do tax income, many use a standard deduction similar to the federal one, and low-earning teens often end up owing nothing at the state level either. A few states set filing thresholds well below the federal amount, so a teen who owes nothing federally could still owe a small amount to the state.
Most income-tax states have their own version of the W-4. If the state allows an exemption claim for filers who expect zero liability, the same strategy applies. The specific form and rules are on the state revenue department’s website.
Local income tax is a separate line in some cities and counties. These are usually flat-rate payroll taxes that apply to all workers regardless of income or age, and they typically cannot be avoided through a withholding exemption. A handful of states also require a small state disability insurance deduction, roughly 0.2% to 1.3% of wages where it applies.
Getting Withheld Money Back by Filing
If federal income tax was withheld during the year and total wages came in under $16,100, every dollar of that federal income tax is refundable. FICA is not refundable through a tax return, but the federal income tax withholding comes back in full. The refund only arrives after a return is filed.
The starting point is Form W-2 from the employer, which has to be provided by February 1 following the end of the tax year.6Internal Revenue Service. General Instructions for Forms W-2 and Form W-3 (2026) The W-2 shows total wages, federal income tax withheld, and FICA paid. The teen (or a parent helping) uses those numbers to file Form 1040.7Internal Revenue Service. Instructions for Forms 1040 and 1040-SR When the standard deduction zeroes out taxable income, the return shows a refund equal to the full amount withheld.
The return is due April 15 of the following year. A teen owed a refund faces no late-payment penalty, but no return means no refund. E-filed returns typically produce refunds within about three weeks; paper returns take longer.
For free filing, the IRS Free File program offers guided tax software at no cost to taxpayers ages 17 and older with adjusted gross income of $89,000 or less.8Internal Revenue Service. E-File: Do Your Taxes for Free A 16-year-old who hasn’t turned 17 by filing time can still use Free File Fillable Forms, which is open to all taxpayers regardless of age or income. The fillable version doesn’t walk the filer through questions the way the guided software does, so a parent’s help is worth having. Either way, filing the return is what turns over-withheld tax back into cash.