Every Deduction on Your
California Paycheck, Explained

You worked hard for your gross pay — but by the time it becomes net pay, a surprising amount has been deducted. If you've ever stared at your pay stub wondering "what IS all this?", you're not alone. This guide explains every single deduction line by line.

The Two Types of Paycheck Deductions

Before we dive in, it's important to understand the fundamental difference between the two categories of deductions:

Mandatory Deductions are required by law. You cannot opt out of them. These include federal and state income taxes, Social Security, Medicare, and California SDI.

Voluntary Deductions are ones you've elected (or your employer offers as a benefit). These include 401(k) contributions, health insurance premiums, HSA contributions, life insurance, and similar benefits. You can typically change these during open enrollment periods.

Voluntary deductions can further be split into pre-tax (reduce your taxable income, lowering your tax bill) and post-tax (come out after taxes are calculated).

Federal Mandatory Deductions

FIT — Federal Income Tax

This is federal income tax withheld based on your W-4 form and the IRS's 2025 withholding tables (Publication 15-T). The amount depends on your filing status, pay frequency, allowances, and taxable wages. Federal income tax uses a progressive bracket system from 10% to 37%, but most hourly workers in California fall in the 12-22% bracket range.

Your employer annualizes your paycheck wages, looks up the withholding from IRS tables, then divides by your pay periods. If your withholding doesn't match your actual tax liability at year-end, you'll either get a refund or owe money when you file.

OASDI / SS — Social Security Tax (Old-Age, Survivors, and Disability Insurance)

You pay 6.2% of your wages for Social Security, up to the 2025 wage base of $176,100. Once your wages hit $176,100 for the year, this tax stops for the rest of the year — you'll notice a bump in your take-home pay if you earn above this threshold.

Your employer matches your 6.2%, paying another 6.2% that you never see. Combined, 12.4% of your wages fund Social Security. This program pays retirement, disability, and survivor benefits.

MED / Medicare — Medicare Tax

You pay 1.45% of ALL wages for Medicare — there is no wage cap. Your employer again matches with another 1.45%. If you earn over $200,000 from a single employer ($250,000 married filing jointly), an extra 0.9% Additional Medicare Tax kicks in on wages above that threshold. This additional tax is employee-only — employers don't pay a match on it.

California State Mandatory Deductions

SIT / CA SIT — California State Income Tax

This is California's state income tax withheld based on your DE-4 form and the California EDD's withholding schedules (DE 44). California has 9 progressive tax brackets ranging from 1% to 12.3%, with a 1% Mental Health Services Tax surcharge on income over $1 million. Your employer calculates this by annualizing your wages and applying California's withholding tables.

CA SDI — California State Disability Insurance

The SDI rate in 2025 is 1.2% with no wage cap — it applies to every dollar you earn. This fund provides:

• Short-Term Disability: If you're unable to work due to a non-work illness or injury, SDI pays 60-70% of your wages for up to 52 weeks
• Paid Family Leave (PFL): Up to 8 weeks of partial wage replacement to bond with a new child or care for a seriously ill family member
• Pregnancy Disability Leave: Up to 4 weeks before birth and 6-8 weeks after

SDI is an employee-only tax — your employer does not pay matching SDI. Note: SDI benefits you receive are generally not subject to federal or state income tax.

CA VPDI — Voluntary Plan for Disability Insurance

Some California employers offer a Voluntary Plan (VP) that replaces the state SDI program. If you see "VPDI" or "VP SDI" on your stub, your employer has a private disability insurance plan approved by the EDD. Benefits are at least as good as state SDI.

Common Pre-Tax Voluntary Deductions

401(k) / 403(b) — Retirement Contributions

Contributions to your employer's 401(k) (for private employers) or 403(b) (for nonprofits/schools) are pre-tax for federal and California purposes. The 2025 contribution limit is $23,500 ($31,000 if you're 50+). These contributions:

• Reduce your federal taxable income (saving federal income tax)
• Reduce your California taxable income (saving CA state tax)
• Are still subject to Social Security and Medicare taxes (FICA)
• Grow tax-deferred until retirement

Medical / Dental / Vision Insurance (Section 125)

If your employer offers health benefits through a Section 125 "cafeteria plan," your premium contributions are typically pre-tax for federal, state, AND FICA taxes. This is one of the most valuable tax benefits available to employees — a $300/month premium saves you roughly $90-120 in taxes depending on your bracket.

HSA — Health Savings Account

HSA contributions (for those with high-deductible health plans) are federally pre-tax. The 2025 limits are $4,300 (self only) and $8,550 (family). Important California exception: California is one of the few states that does NOT recognize federal HSA tax treatment. California taxes HSA contributions as regular income at the state level. You'll pay CA state tax on HSA contributions but not federal tax — a nuance our calculator accounts for.

FSA — Flexible Spending Account

Medical FSAs allow pre-tax contributions (up to $3,300 in 2025) for qualifying medical expenses. Unlike HSAs, FSA funds generally must be used within the plan year (with a grace period or $660 rollover allowed). FSAs are pre-tax for federal AND California purposes.

Dependent Care FSA

Allows pre-tax contributions (up to $5,000/year, or $2,500 if married filing separately) for childcare expenses. Pre-tax for federal and state purposes. This can save significant money for working parents with daycare expenses.

Commuter Benefits (Transit/Parking)

Employer-sponsored commuter benefits (transit passes, vanpool, qualified parking) are pre-tax up to $315/month each (transit and parking limits) in 2025. Pre-tax for federal, state, AND FICA taxes.

Common Post-Tax Voluntary Deductions

Roth 401(k) Contributions

Unlike traditional 401(k), Roth 401(k) contributions come from after-tax dollars. You pay tax now, but qualified withdrawals in retirement are entirely tax-free — including decades of investment growth. The same contribution limits apply ($23,500 in 2025).

Life Insurance (Above $50,000)

Employer-paid group term life insurance is tax-free up to $50,000 of coverage. The imputed income of coverage above $50,000 (calculated using IRS tables based on your age) is taxable and added to your W-2. You may see this as "Group Term Life" or "GTL" on your pay stub.

Wage Garnishments

If you have a court order for child support, student loan default, tax debt, or other legal judgments, a portion of your wages may be garnished. California limits garnishments to 25% of disposable earnings (or the amount exceeding 40 times the state minimum hourly wage per week, whichever is less). Garnishments are post-tax deductions.

Why Your Paycheck Deductions Might Change

Workers often notice their take-home pay fluctuates. Here are common reasons:

• Hitting the Social Security wage cap: Once you earn $176,100 in 2025, Social Security stops being withheld — your paycheck gets larger
• Year-end bonus: Bonuses are taxed at a flat supplemental withholding rate (22% federal, 10.23% California for amounts up to $1 million)
• New W-4 or DE-4: Changing your withholding allowances takes effect the next payroll cycle
• Benefits open enrollment: Changes to health insurance or 401(k) contributions change your pre-tax deductions
• Pay raise: Moving into a higher tax bracket (marginally) increases withholding

How to Read a California Pay Stub (Quick Reference)

Abbreviation	Full Name	Who Pays	Pre or Post-Tax
FIT / Fed Tax	Federal Income Tax	Employee	Mandatory
OASDI / SS	Social Security	Employee (6.2%)	Mandatory
MED / Medicare	Medicare	Employee (1.45%)	Mandatory
SIT / CA Tax	California State Tax	Employee	Mandatory
CA SDI	California SDI	Employee (1.2%)	Mandatory
401(k)	Traditional 401(k)	Employee	Pre-Tax
Roth	Roth 401(k)	Employee	Post-Tax
Med Ins / Health	Health Insurance Premium	Employee share	Pre-Tax (Section 125)
HSA	Health Savings Account	Employee	Pre-Tax (federal only)
FSA	Flexible Spending Account	Employee	Pre-Tax
GTL	Group Term Life Imputed Income	Added to income	Taxable fringe benefit