Fri. Dec 8th, 2023
    Understanding Salary Taxes in Texas: How Much is Deducted from Your Paycheck?

    Texas is known for its favorable stance on taxes, especially because it is one of the few states in the United States that does not impose a state personal income tax. However, this does not mean that workers in Texas are exempt from all types of taxes on their salaries. While they do not face state income tax deductions, employees are still subject to federal taxes and other mandatory deductions.

    Federal Taxes and Deductions

    Federal income taxes are a constant for all workers in the United States, regardless of the state they reside in. The rate of these taxes varies based on income level and individual tax situation, but all employees must pay them. Additionally, workers in Texas must also contribute to Social Security and Medicare, two federal programs that provide benefits for retirees, disabled individuals, and the sick. These contributions are known as FICA (Federal Insurance Contributions Act).


    Is there any state income tax in Texas?
    No, Texas is one of the states that does not impose a state personal income tax.

    What percentage of salary goes towards federal taxes?
    The percentage varies based on income level and individual tax situation, but it can range from 10% to 37% for the 2021 fiscal year.

    What is FICA and how much is paid?
    FICA refers to contributions to Social Security and Medicare. The combined total of these contributions is 7.65% of salary, divided into 6.2% for Social Security and 1.45% for Medicare.

    Definitions of Terms Used

    Income tax: A tax paid to the federal government and, in some states, the state government, based on earned income.

    FICA: Federal Insurance Contributions Act, which funds Social Security and Medicare.

    In summary, while Texas residents enjoy the advantage of not paying state income taxes, they are not completely free from tax obligations. Federal taxes and contributions to programs like Social Security and Medicare remain an essential part of every worker’s fiscal responsibility in the state.