Every Paycheck Deduction, Explained Line by Line

David Vance, CPA

Senior Payroll & Tax Specialist · Published 2026-10-05 · 6 min read

When you inspect a US earnings statement, you will notice dozens of acronyms and deduction codes: FIT, SIT, OASDI, MED, 401K, HSA, FSA, LTD, and GTL. These deductions fall into two broad buckets: mandatory statutory withholdings enforced by federal, state, and local governments, and voluntary employee benefit deductions selected during open enrollment.

Mandatory Payroll Deductions (Statutory)

1. FIT (Federal Income Tax): Based on your IRS W-4 elections. 2. OASDI / Social Security: Flat 6.2% on wages up to $184,500. 3. MED / Medicare: Flat 1.45% on all earnings, plus 0.9% for high-income earners. 4. SIT (State Income Tax): Based on state tax laws. 5. SUI/SDI: State unemployment or disability insurance in states like CA, NJ, and NY.

Pre-Tax vs Post-Tax Benefits Comparison

Section 125 cafeteria plans offer the highest tax savings because they eliminate both income taxes and FICA payroll taxes.

Benefit Type	Tax Treatment	Exempt from FICA?	Example Item
Health / Dental / Vision	Pre-Tax (Section 125)	Yes	Medical insurance premium
HSA / FSA	Pre-Tax	Yes	Health Savings Account
Traditional 401(k) / 403(b)	Pre-Tax	No (Income tax only)	Retirement plan contribution
Roth 401(k)	Post-Tax	No	Tax-free future retirement growth
Wage Garnishment	Post-Tax	No	Child support, tax levies

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Model Pre-Tax and Post-Tax Deductions

Common Questions

FICA is the overarching law covering both OASDI (Old-Age, Survivors, and Disability Insurance, 6.2%) and Medicare (Hospital Insurance, 1.45%).

By federal statute, traditional 401(k) contributions are exempt from federal and state income taxes, but remain subject to Social Security and Medicare taxes.