Federal Taxes

• Employers must make certain tax deductions that comply with all applicable laws, then forward those amounts to the separate tax authorities. Federal income taxes represent the bulk of deductions in standard amounts that follow withholding tables. Next are taxes for Social Security (usually 6.2 percent) and Medicare (1.45 percent). These last two are known as Federal Insurance Contributions Act (FICA) taxes, and employers make matching contributions of 6.2 and 1.45 percent, respectively.
  
  

State and Local Taxes

• Most states assess income taxes that employers must deduct from paychecks. Other deductions include school district, county and city taxes, as well as disability and unemployment insurance. These amounts can vary widely depending on the locale; states such as New York and its cities absorb far more of an employee's earnings than, for example, Alaska, which has no state income tax.
  
  

Voluntary Deductions

• Employees have control over many deductions that remain voluntary, such as premiums for life insurance, 401k and individual retirement account (IRA) plans, stock purchase plans, union dues and mandatory job expenses such as uniforms. Health insurance premiums vary by employer; some will assume the entire cost, while others require employees to contribute a certain percentage. The primary health categories are medical, eye and dental insurance.
  
  

Tax Relief Act of 2010

• As part of the federal government's Tax Relief Act of 2010, employees are required to contribute 4.2 percent rather than the standard 6.2 percent toward Social Security. This holds true solely for 2011, after which employees must once again meet the 6.2 percent amount. Given federal and state budget deficits, workers should not count on similar payroll tax holidays in the future.