2. Study the types of deductions

Deductions from your paycheck are also called “withholding,” and they fall into different categories. If you don’t understand them, ask your supervisor or the Human Resources department to explain.

Common categories of deductions:

• Federal income tax
• Social Security and Medicare
• State income tax
• Local income or wage tax
• Retirement plans
• Health insurance and other insurance

Tax rates often change, and so do insurance costs. For this reason, the amounts deducted from your pay may change from one year to the next.