Your first paycheck is always a shock — it's way less than expected. Here's a beginner-friendly guide to understanding why and what every deduction means.
By ExpertPaystubs Editorial Team. Published 2026-03-25
Almost every new worker has the same reaction to their first paycheck — shock. If you earn $15/hour and work 80 hours in a pay period, you'd expect $1,200. Instead, you receive something closer to $980.
Welcome to taxes. Here's what's happening.
Why Your Paycheck Is Less Than Expected
Your employer is legally required to withhold taxes before paying you. These mandatory deductions include:
The Big Three Federal Deductions
| Tax | Rate | What It Funds |
|---|---|---|
| Federal Income Tax | 10-12% (for entry-level) | Government services, military, infrastructure |
| Social Security | 6.2% | Your future retirement benefits |
| Medicare | 1.45% | Hospital insurance for retirees |
Combined: At minimum, about 17-20% of your gross pay goes to mandatory federal taxes.
State Income Tax (Varies)
- If you work in TX, FL, NV, WA, WY, SD, TN, NH, or AK: $0
- Other states: 1-13.3% depending on the state and your income
- Average for entry-level workers: 2-5%
First Paycheck Example
Hourly worker: $15/hr, 80 hours bi-weekly, single, no dependents, Texas:
| Item | Amount |
|---|---|
| Gross Pay | $1,200.00 |
| Federal Income Tax (10%) | -$72.00 |
| Social Security (6.2%) | -$74.40 |
| Medicare (1.45%) | -$17.40 |
| State Tax (TX = 0%) | -$0.00 |
| Net Pay | $1,036.20 |
Same worker in California:
| Item | Amount |
|---|---|
| Gross Pay | $1,200.00 |
| Federal Income Tax (10%) | -$72.00 |
| Social Security (6.2%) | -$74.40 |
| Medicare (1.45%) | -$17.40 |
| CA State Tax (~2%) | -$24.00 |
| CA SDI (1.1%) | -$13.20 |
| Net Pay | $999.00 |
Your W-4: Why It Matters
When you started your job, you filled out a W-4 form. This tells your employer how to calculate your federal tax withholding.
For most new workers with one job and no dependents: Just complete Step 1 with your name and filing status (Single). Leave steps 2-4 blank. This works for most people.
Common first-timer mistake: Claiming too many dependents to increase take-home pay — this means you'll owe the IRS at tax time.
Pro Tips for Your First Job
- Start your 401(k) early — Even $50/month at age 20 grows significantly by retirement
- Build an emergency fund — Save 3 months of expenses before lifestyle inflation
- Review every pay stub — Catch errors early, understand where your money goes
- Don't fear withholding — You might get some of it back as a tax refund
- Keep your pay stubs — You'll need them for apartment applications, loan applications, and tax filing
- Understand your benefits — If offered, health insurance reduces taxable income
The Bright Side: Tax Refunds
If you're a student working part-time or only worked part of the year, you may get a significant tax refund when you file your return. This happens because:
- Withholding assumes you work the full year
- If you only work part of the year, you paid taxes as if you'd earn the annual equivalent
- Your actual annual income may fall in a lower bracket