Who doesn’t want to earn more money payday? It might be possible to do this without getting a raise.

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If your salary seems a little too thin every time but your salary is decent, the problem may be that your withholding tax is poorly defined or in a way that doesn’t allow you to make the most of your income .

Here are tips for adjusting your withholding to maximize your salary for the new year.

What is restraint?

When you arrive as a new employee at a company, you must fill out an IRS form known as a W-4. This helps the company know how much to withhold in federal taxes from each paycheck. Before 2020, you selected the deduction number best suited to your tax situation. However, since the Tax Cuts and Jobs Act of 2017, the IRS has removed this process for a simplified version (until 2025).

Other common taxes you can see on your check include:

• State income tax: In states that have an income tax, money will be taken from your check for this purpose.

• Local taxes: These taxes may also appear to fund public systems in your city or county.

• Social Security Tax: Most often noted as OASDI on your pay slip, this is the portion that you pay into your Social Security credits for retirement.

• Health insurance tax: You and your employer pay a 1.45% Medicare tax on health care in retirement.

Discover: Here’s how much your state collects on each type of tax

Follow this five-step process

Most people must follow a five-step process to determine their withholding. It happens as follows:

1. Enter your personal information. This includes your name, address, and social security number, as well as expected filing status. This information will determine the standard deduction and tax rates used to calculate your withholding.

2. Indicate if you have multiple jobs or if your spouse works. If you have more than one job or file jointly and your spouse also works, indicate that here.

3. Use the IRS Withholding Estimator. If you or your spouse has self-employment income, you should use this tool or you can use the multitasking spreadsheet.

4. Select the standard deduction. If there are only two standard jobs between you and your spouse, you receive the standard deduction. That’s $29,200 for married people and $14,600 for individuals.

5. Claim dependents and other credits. In this step, you check to see if you are eligible for credits, such as the child tax credit, or other credits related to dependents. This will reduce your expected taxes.

How to Reduce Deductions and Maximize Salary

A key sign that your withholding might be too high is if you get a tax refund at the end of the year. While this may seem like a good thing, the fact is that you could instead be bringing this money home throughout the year from your paycheck to save or invest. So, ideally, you want to see if you qualify for a tax credit or other deductions beyond the standard deduction (such as itemized deductions, IRA contribution deductions, or interest deductions on student loans, to name a few).

If one or more of the following factors occur, this may warrant a change to your withholding, resulting in more money in your paycheck, so be sure to change your withholding to reflect this:

• A major life change

• A new job

• A change in income (such as side work income or investment gains)

• Marriage or divorce

• The birth or adoption of a child

• Buying a house

To get the most out of every paycheck, make sure you don’t overlook any key areas that affect your finances. You can always consult an accountant first.

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This article was originally published on GOBankingRates.com: How to adjust your withholding to maximize your salary in 2025