Budgeteen
Last reviewed 30 September 2026 · Federal rules from IRS pages · General information, not tax advice
On a teen's first paycheck, the employer withholds 6.2% for Social Security and 1.45% for Medicare, 7.65% in total, plus any federal income tax set by Form W-4 and any state tax where it applies. Many teens get some or all of the withheld income tax back by filing a return. Every figure here comes from IRS pages.
| Line on the pay stub | What it is | Rule | Source |
|---|---|---|---|
| Gross pay | Hours worked × hourly rate, before anything comes out | None | None |
| Social Security | Federal payroll tax | 6.2% of wages; your employer pays another 6.2%. For 2026 it applies to wages up to $184,500 | IRS Topic 751; IRS Pub 926 (2026) |
| Medicare | Federal payroll tax | 1.45% of wages; your employer pays another 1.45%; no wage limit | IRS Topic 751; Pub 926 |
| Federal income tax | Withheld based on your Form W-4 and your pay | It can be low or zero on small paychecks, depending on your W-4 | IRS About Form W-4 |
| State or local income tax | Depends on where you live and work | Check your state's tax agency | None |
| Net pay | What reaches you | The number to budget with | None |
Social Security and Medicare together are 7.65%, and a W-4 "exempt" claim does not stop them.
Example only. Your pay stub will differ. Say you work 15 hours at $12.00 an hour. Gross pay is $180.00. Social Security at 6.2% is $11.16, and Medicare at 1.45% is $2.61, so $13.77 comes out for those two. That leaves $166.23 before any federal income tax or state tax. Those depend on your Form W-4, your employer's IRS withholding tables and your state, so they aren't shown here. Whatever lands in your account, budget the net number.
The IRS says to complete Form W-4 so your employer withholds the correct federal income tax from your pay, and to consider a new one each year or when your personal or financial situation changes. According to IRS Topic 753, you may claim exempt from withholding only if you had no federal income tax liability last year and expect none this year. An exempt W-4 is valid for one calendar year. To stay exempt, give your employer a new W-4 by February 15 (or the next business day if the 15th falls on a weekend or holiday). Without it, the employer withholds as if you're single or married filing separately with no other entries. The IRS Tax Withholding Estimator can help you check a W-4.
IRS Publication 501 (2025) sets the federal filing rules for a single dependent who is under 65 and not blind. For tax year 2025 you must file if any of these apply:
The standard deduction for a dependent is the greater of $1,350 or earned income plus $450, capped at the regular $15,750. Publication 501 also has a "who should file" list: even if you don't have to file, you should file to get money back if income tax was withheld from your pay. For tax year 2026 the IRS raised the regular single standard deduction to $16,100. Dependent amounts for 2026 will be in the 2026 Publication 501. These are federal rules; state filing rules differ.
If you work for yourself, such as your own mowing or pet-sitting jobs for several neighbors, IRS Topic 554 says you usually must pay self-employment tax if your net earnings from self-employment are $400 or more. It is figured on 92.35% of net earnings. If a family is your employer for household work, such as babysitting in their home, IRS Publication 926 says wages paid to a household employee who was under 18 at any time during the year are not counted for Social Security and Medicare unless household work is that person's principal occupation. For a student it isn't. Whether you are self-employed or a household employee depends on who controls the work, so ask a parent or a tax professional if you are unsure. A practical habit: keep a dated log of every gig and what you were paid. In Budgeteen, Shift Mode times a babysitting or mowing shift and logs the earnings into the week's plan. Ideas by age are on side hustles for teens by age. Both cases side by side are in the table below, and a calculator for splitting the week is on how teen budgeting works.
Babysitting pay goes into the week like any other cash: count it when it is in your hands. Tax is a separate, yearly question. Under federal rules the answer depends on two things: whether you are self-employed or a family's household employee, and how much you earn in the year. Before you take a job, check what work is allowed at your age on jobs for 13, 14 and 15 year olds. Ideas by age are on side hustles for teens by age.
IRS Publication 926 gives the example of a sitter who babysits in a family's home, follows the family's specific instructions and uses equipment and supplies the family provides. That sitter is the family's household employee. The same publication says that if only the worker can control how the work is done, the worker is self-employed, and that a worker who cares for a family's child in the worker's own home generally isn't the family's employee. If you can't tell which describes you, work it out with a parent or a tax professional.
| Your situation | What the IRS says | IRS page, checked October 2026 |
|---|---|---|
| Self-employed, net earnings of $400 or more in the year | You usually must pay self-employment tax, and you have to file an income tax return. Net earnings are what you were paid minus ordinary and necessary business expenses. | Topic 554; Self-employed individuals tax center |
| Self-employed, net earnings under $400 | The $400 self-employment rule doesn't apply, but you still have to file if you meet any other filing requirement. | Self-employed individuals tax center |
| A family's household employee, under 18 at any time in the year | The family doesn't count your wages for Social Security and Medicare, unless household work is your principal occupation. For a student, it isn't. | Publication 926 (2026); Topic 756 |
| Income tax, if someone claims you as a dependent | Whether you must file depends on your earned and unearned income compared with dollar thresholds that change every year. | Publication 501 (2025) |
Topic 554 says the self-employment tax rate is 12.4% for Social Security plus 2.9% for Medicare, 15.3% in total, and that the amount it applies to is generally 92.35% of net earnings. The yearly filing thresholds for dependents are in the Publication 501 section above.
Example only. Your numbers will differ. Say you babysit for neighbors on your own terms, are paid $600 over the year and had no business expenses. Net earnings are $600, which is $400 or more, so self-employment tax usually applies and you have to file. 92.35% of $600 is $554.10, and 15.3% of that is $84.78. No one withholds tax from cash a family hands to a self-employed sitter, so it is settled with your return; the IRS self-employed tax center explains when estimated payments apply instead. Income tax is figured separately on the same return.
Keep a dated log of each job and what you were paid. In Budgeteen, Shift Mode times a babysitting shift and logs the earnings into the week's plan. How much of each payout to hold in Save is your call; the calculator shows what a bigger Save share leaves for the other envelopes.
Plan with take-home pay, then split it into Needs, Wants, Save and Give. Budgeteen's Skills tab includes a paycheck decoder that walks through a pay stub. Before your first job, check the federal hours and job rules for 14- and 15-year-olds. See how teen budgeting works in Budgeteen, teen money statistics and budgeting strategies for what to do with the net number.
Your hours times your rate is gross pay. Before you are paid, the employer withholds 6.2% for Social Security and 1.45% for Medicare, plus federal income tax based on your Form W-4 and any state or local tax. What lands in your account is net pay, the number to budget with.
Only if you had no federal income tax liability last year and expect none this year, according to the IRS. An exempt Form W-4 lasts for one calendar year, so you must give your employer a new one by February 15 to stay exempt. Exempt does not stop Social Security or Medicare withholding.
Usually, yes. Most jobs withhold 6.2% for Social Security and 1.45% for Medicare no matter your age. One IRS exception: a family that pays you for household work, such as babysitting in their home, generally does not count your wages for these taxes if you were under 18 at any time that year.
For tax year 2025, a single dependent under 65 must file if earned income was more than $15,750, unearned income was more than $1,350, or total income passed a set limit, per IRS Publication 501. Even below those amounts, filing is how you get back income tax that was withheld from your pay.
Official pages, reviewed 30 September 2026.
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