Understanding Your Paystub: What Taxes Are Withheld in Washington State

If you’ve ever looked at your paystub and wondered “Where does all this money go?” — you’re not alone! Let’s break it down.

Here’s what typically gets withheld from paychecks in Washington State:

🔹 Federal Income Tax — goes directly to the IRS and is applied toward your federal tax liability when you file your tax return.

🔹 Social Security Tax (6.2%) — funds retirement and disability benefits; shared equally by you and your employer.This tax only applies to the first $168,600 of wages in 2025 — income above that limit is not subject to Social Security tax.👉 If you change jobs during the year, be sure to track your total Social Security wages so you don’t overpay. Employers don’t coordinate this between jobs, and any excess paid can only be refunded when you file your tax return.

🔹 Medicare Tax (1.45%) — supports health coverage for seniors; also matched by your employer. There’s no income cap for Medicare tax, and high earners pay an additional 0.9% on wages above $200,000 (single) or $250,000 (married filing jointly).

🔹 WA Cares Fund (0.58%) — this is Washington’s long-term care program. The 0.58% of your wages goes toward funding future benefits that help cover long-term care costs, such as in-home assistance or nursing support.

🔹 WA Paid Family & Medical Leave (PFML) — supports paid leave for medical or family needs; shared between employer and employee.

🔹 WA Workers’ Compensation — funds worker protection and injury benefits; most of it paid by the employer, with a small employee portion.

👉 Important note:When you file your federal tax return, only the Federal Income Tax portion counts as a prepayment toward your federal tax liability.All the other deductions — Social Security, Medicare, and state programs — serve other specific purposes but don’t reduce the tax you owe on your return.

💡 For business owners:If you operate as a sole proprietor or single-member LLC (not taxed as an S corporation), you’re both the employee and the employer. That means you pay the full 15.3% of Social Security and Medicare taxes yourself — this is known as self-employment tax.

If you operate a corporation (S-corporation or C-corporation), you’ll still pay the same total amount of 15.3% on your wages — but it’s split between two roles:

• As an employee, half (7.65%) is withheld from your paycheck.

• As an employer, your company pays the other half (7.65%) directly.

Either way, the combined total equals the same 15.3% contribution toward Social Security and Medicare.

✅ Understanding your paycheck (and how it differs from business income) is the first step to smart tax planning — and making sure you’re not over- or under-withholding during the year.