Have you ever wondered, "What is an example of a mandatory deduction on a pay stub?"

Have you ever wondered, “What is an example of a mandatory deduction on a pay stub?”

Mandatory pay stub deductions are amounts withheld from employees’ paychecks to fund essential government programs, ensuring financial security and healthcare coverage nationwide.

As per our expertise, the Federal Insurance Contributions Act, or FICA for short, is a clear example of a mandatory tax deduction.

Not only does it pay for Social Security and Medicare, it’s also vital for retirees’ financial security and medical assistance for seniors and disabled people.

In this blog post, we at Check Stub Maker will delve deeper into the intricacies of FICA by exploring its purpose, as well as how to accurately calculate and deduct it from your pay stubs.

Let’s dive in!

What this article covers:

Why Is FICA the Most Common Mandatory Payroll Deduction?

A common deduction on a person’s pay stub would be the Federal Insurance Contributions Act (FICA) which is mandatory due to its role in funding Social Security and Medicare programs.

Through our practical knowledge, it’s crucial for retirement benefits and medical coverage, offering financial security for employees after retirement as well as healthcare support for seniors and disabled individuals.

As a trusted provider of paystubs, we at Check Stub Maker recognize the significance of FICA in supporting vital social safety nets, contributing to the well-being of our national workforce.

How Does FICA Work?

Unlike a choice deduction on paystub, FICA works by deducting a percentage of an employee’s income to pay for pivotal government institutions.

The employer matches these deductions, ensuring an overall, meaningful contribution.

FICA taxes are split into two parts:

  • Social Security
  • Medicare

Our findings show that Social Security taxes fund retirement, disability, and survivor benefits, while Medicare taxes fund healthcare for seniors and certain disabled persons.

How Is FICA Calculated and Deducted From Pay Stubs?

FICA is calculated based on a fixed percentage of an employee’s earnings.

6.2% (Social Security) + 1.45% (Medicare) = 7.65% (total FICA contribution from employee)

This is subtracted from an employee’s gross pay (the taxable threshold of which is roughly $168,600) before arriving at the net pay displayed on their pay stub.

$168,600 (taxable income threshold)


0.0765 (FICA tax rate)

= $12,897.90 (estimated taxable income for FICA deduction from employee’s paycheck)

It’s the responsibility of the employer to match these tax rates, which makes the total FICA contribution 12.4%.

$168,600 (taxable income threshold)


0.124 (combined employee and employer FICA tax rate)

= $20,906.40 (estimated taxable income for FICA deduction from employee and employer)

After putting it to the test, our paystub creator automatically computes these deductions when generating check stubs.

This ensures accuracy and compliance with tax regulations related to mandatory contributions.

What Is an Example of a Mandatory Deduction on a Pay Stub FAQ

Why Are FICA Contributions Important?

FICA provides financial security for retirees and people with disabilities while guaranteeing access to medical assistance for millions of Americans.

Without FICA, vital programs like Social Security and Medicare would be unsustainable, jeopardizing the well-being of countless individuals and families.

which is an example of a mandatory deduction on a pay stub

How Are FICA Deductions Reported?

FICA is typically reported on pay stubs, detailing the specific amounts withheld for Social Security and Medicare taxes.

We have found from using it that our paystub generator automatically computes and separates FICA deductions based on employees’ earnings and tax rates.

By doing so, it creates detailed and precise reporting that’s easy for taxpayers to understand.

At Check Stub Maker, we empower employees, giving necessary insight into their payroll deductions and assisting them with regulatory adherence to federal regulations.


In this blog post, we’ve unraveled the mystery behind mandatory deductions on pay stubs, shedding light on the ubiquitous presence of FICA contributions.

Understanding FICA’s importance in funding essential programs like Social Security and Medicare is key to financial literacy.

Ready to generate and streamline accurate pay stubs? Try our user-friendly paystub maker today.

Visit us at Check Stub Maker and take the hassle out of payroll management with our paystub important message and insights.

Your employees and your business will thank you!

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