The exact gross-to-net deductions differ by company and location, depending on the optional deductions included in the company policy and required by local laws. The most common gross-to-net deductions in the US are as follows: Federal Income Tax The amount of federal income tax withheld depends on several factors, such as the employee’s income level, which affects tax brackets, filing status, and the number of dependents. Employers are responsible for withholding federal income tax on behalf of their employees and paying the amounts to the IRS. Calculating the correct federal income tax rate is important to maintain compliance with federal tax regulations, ensuring employees avoid underpayment or overpayment of taxes. State Income Tax The amount withheld for state income tax varies based on where the employee works. Like federal income tax, state income tax is based on the employee’s income level, which impacts their tax rate, filing status, and the number of dependents. FICA (Social Security and Medicare) FICA, which includes social security and medicare taxes, is deducted from an employee’s gross wages when calculating net income. Social Security tax funds retirement, disability, and survivor benefits for eligible employees. Medicare tax funds healthcare for those over the age of 65 and certain individuals living with disabilities. Employers are responsible for withholding and paying FICA taxes on behalf of employees. Health insurance premiums Health insurance premiums are common voluntary deductions taken from an employee’s gross income to cover the cost of their health insurance plan. One of several pre-tax deductions, the premium amount varies based on the specific health insurance plan and the level of coverage the employee selects. Deducting health insurance premiums from an employee’s paycheck helps ensure the plan’s cost is covered and the employee has access to necessary healthcare services. Retirement contributions Retirement contributions fund an employer’s retirement savings plan, such as a 401(k) or IRA. The exact calculations may differ depending on the company policy. In most instances, an employee elects to contribute a percentage of their gross pay to the retirement plan, and the employer matches the contribution. Union dues Union dues fund the activities and expenses of the union, including negotiating contracts, advocating for worker rights, and providing education and training to members. The amount varies based on the union and collective bargaining agreement. Wage garnishments Wage garnishments are taken from an employee’s gross pay when a court or government agency orders a portion of the employee’s wages to be withheld to pay off a debt or judgment. Common wage garnishments include child support, back taxes, or student loans.