Taxes can vary greatly depending on where and who is required to file. And when taxes are deducted from your paycheck, they can be even more variable.
That’s why many people wonder what taxes are deducted from their paycheck, when working in Washington because, unlike in other states, several taxes don’t apply to local workers.
State and local taxes
Those working in Washington have probably noticed that their paychecks do not show any value for state or local taxes, which is basic.
There are no state or local taxes in Washington, i.e., Washington State has no income tax, nor do any of its cities have local taxes.
The above represents a fairly significant decrease in the amount accrued by checks for these two taxes, especially in comparison to states that require these two taxes.
What taxes are deducted from a paycheck in Washington?
As mentioned in the previous paragraph, no state or local taxes are deducted in Washington because the state does not collect them, i.e., no one within its territory must pay them regardless of their status, salary or age.
However, other taxes are deducted from all employees’ paychecks, including federal taxes.
These are all taxes at the national level and must be paid by all persons who exercise employment or remunerated activity within the country. Although, there may be exceptions depending on various conditions.
FICA taxes are dedicated to health care to offer the worker the opportunity to receive medical assistance when needed and to help the economic growth of the health care system in general.
These taxes are divided into two parts. The first, which represents a higher value, is the social security tax. With it, the worker is deducted 6.2% of their gross paycheck.
The mentioned tax has a limit of $147,000 earned in the year; that is to say, when workers have earned such an amount, they can no longer deduct the social security tax.
On the other hand, within the FICA taxes, there is the Medicare tax. This tax represents a much lower deduction than the abovementioned one, being 1.45% of the gross salary.
Unlike the social security tax, in the Medicare tax, the limit to keep collecting the 1.45% tax is up to the total wage-earning of $200,000.
When this limit is exceeded, the worker does not stop paying the tax, as in the case of the social security tax. On the contrary, once $200,000 is reached in the salary year, the rate increases by a further 0.9%.
The similarity between these two taxes is that the employer must match the total value of both taxes paid by the worker. In other words, the IRS receives the taxes from the workers and the same value from the employer.
Federal income tax
Federal income tax is the tax paid, in short, for living and receiving income within the country. Whether a worker must pay this tax depends on age, marital status, and salary.
Most people, especially workers, must pay this tax, although some are exempt. The tax can range from 0% for those who do not have to pay it to 37% for those who do.
The difference between the federal income tax payable by each person when they are required to pay it depends on their gross annual income. Therefore, some will have to pay very little and others much more.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.