States Where Your Paycheck Shrinks Weirdly in December

There's this thing that happens in certain states where you get to December and your paycheck is just... off. Not catastrophically smaller, not enough to make you call HR in a panic, but noticeably lighter than it was in October. And if you're like most people, you assume it's something about holiday deductions or maybe you're imagining it because you're spending more money on gifts and travel and whatever financial carnage happens between Thanksgiving and New Year's.

But you're not imagining it. In a handful of states, your December paycheck actually does shrink — and it has nothing to do with how much you're spending or whether your company changed health insurance plans or any of the normal end-of-year financial chaos. It's a quirk of how certain state tax systems work, specifically how they calculate withholding for state income taxes when you're paid biweekly or semi-monthly and the calendar year doesn't divide evenly into your pay periods.

Here's the thing nobody explains clearly: most state income tax withholding works by annualizing your current paycheck. Your employer looks at what you made this pay period, multiplies it by however many pay periods are in a year, and withholds state taxes based on that projected annual income. This works fine most of the time. But in years where you get an extra paycheck — which happens if you're paid biweekly, because 52 weeks divided by 2 is 26, and 26 times 2 is 52, but some years have 27 biweekly pay periods because of how the days fall — the math gets weird.

And in states that don't smooth this out or cap their withholding formulas properly, that 27th paycheck can trigger withholding as if you suddenly make way more money than you actually do.

The biweekly calendar problem nobody warned you about

Let's say you make $60,000 a year and you're paid biweekly. Most years, you get 26 paychecks of about $2,308 each (before taxes). But every 11 years or so, depending on which day of the week January 1st falls on, you get 27 paychecks. That 27th one usually lands in late December or early January.

If you're paid on a semi-monthly schedule — twice a month, always on the 15th and 30th or whatever — this doesn't affect you. You get exactly 24 paychecks every year, no variation. But if you're biweekly, that extra check is coming eventually, and when it does, some state tax systems treat it like you just got a massive raise.

The problem is the annualization formula. When your employer calculates state withholding on that 27th paycheck, they're essentially assuming you're going to get 27 paychecks every single pay period for the entire year, which would mean you're suddenly making $62,308 instead of $60,000. And that bump can push you into a higher state tax bracket — or at least trigger a higher effective withholding rate — for that one paycheck.

In states with progressive income tax brackets and withholding tables that don't account for this quirk, that December paycheck withholding can be $100 to $300 higher than usual. Which is annoying, but also technically correct, because you are making more money that year. Just not in the way the withholding formula thinks you are.

The states where this happens most noticeably are the ones with steeper progressive tax brackets and withholding formulas that key heavily off the annualized income calculation without any smoothing mechanism. California, Oregon, Minnesota, and Connecticut are the usual suspects. New York sometimes shows up on this list depending on your income level. These are states where the difference between one tax bracket and the next can be a percentage point or more, and where the withholding tables are aggressive enough that even a small annualized income bump triggers a real difference in take-home pay.

But here's where it gets weirder: in some of these states, it's not just the 27th paycheck that looks different. If you're in a high enough tax bracket, every December paycheck can withhold slightly more than the rest of the year, because year-end calculations kick in and your employer's payroll system starts reconciling what you've actually earned versus what they've been withholding, and if there's a gap, they adjust. This is especially common if you got a raise mid-year or had any kind of bonus or commission that complicated the withholding math.

I built the SalaryHog calculator partially because I kept seeing people ask about this on Reddit and personal finance forums, and nobody had a clear answer that didn't involve downloading a state withholding formula PDF and doing algebra. The short version is: if you live in a state with income tax and you're paid biweekly, your December paycheck in a 27-pay-period year is going to be smaller, and there's not much you can do about it except know it's coming.

The really frustrating part is that you'll get this money back. When you file your state taxes in April, the excess withholding shows up as a refund. But that doesn't help you in December when you're trying to figure out why your paycheck is suddenly $150 lighter and you're wondering if you did something wrong or if your employer screwed up.

States that smooth this out (and the ones that don't)

Some states have figured this out and built smoothing mechanisms into their withholding formulas. Pennsylvania, for instance, has a flat income tax, so there's no bracket creep to worry about — your withholding rate is the same whether you make $60,000 or $62,000. Texas, Florida, Washington, and the other no-income-tax states obviously don't have this problem at all, which is one of those rare cases where tax simplicity actually makes life easier instead of just shifting the burden somewhere else.

But states with progressive brackets and no smoothing? They just let it happen. Oregon's withholding formula is particularly aggressive about this. If you're in the 8.75% or 9.9% bracket (which kicks in around $125,000 for a couple filing jointly in 2026), that 27th paycheck can withhold an extra $200 to $400 just on the state side, depending on your exact income level. California's top bracket is 12.3% (13.3% if you're over a million, but if you're making that much you probably have an accountant who explained this already), and the jump from the 9.3% bracket to the 10.3% bracket happens around $61,214 for single filers — which means if you're anywhere near that threshold, an annualized income bump from a 27th paycheck can push you over and trigger higher withholding.

Minnesota has a similar issue, with brackets at 5.35%, 6.80%, 7.85%, and 9.85%. The gap between those tiers is wide enough that a small annualized income change can make a real difference in withholding, and Minnesota's withholding tables don't smooth for the 27-paycheck problem.

Connecticut's brackets are closer together (3%, 5%, 5.5%, 6%, 6.5%, 6.9%, and 6.99% depending on income), but the state's withholding formula is weirdly sensitive to year-over-year changes, so even if you don't hit a new bracket, your December withholding might tick up slightly just because of how the calculation works.

The states that don't have this problem, other than the no-income-tax ones, are mostly states with flat taxes or very simple bracket structures. Illinois has a flat 4.95% rate, so 27 paychecks or 26, your withholding percentage stays the same. Michigan is 4.25% flat. Colorado is 4.40% flat. Indiana is 3.05% flat. These states are boring in a good way — your paycheck looks the same every time, December included.

Why this feels worse than it actually is

The reason this bothers people so much, even though it's technically correct and you get the money back at tax time, is that it violates the psychological contract of a salary. When someone offers you $60,000 a year, your brain divides that by 26 and expects every paycheck to be about the same. You budget around that number. You know what to expect. And when one paycheck is suddenly smaller — or when December paychecks are consistently lighter than the rest of the year — it feels like something broke, even though nothing did.

It's the same reason people hate withholding in general. Nobody likes the idea that the government is holding their money hostage and then giving it back later as if they're doing you a favor. But at least with regular withholding, the amount is predictable. This December thing is just unpredictable enough to be annoying.

And the worst part is that it's completely invisible unless you're paying close attention. Your pay stub will show a higher state withholding amount, but it won't explain why. There's no line that says "27-paycheck adjustment" or "annualization quirk." It just looks like your employer withheld more for state taxes this time, and you're left trying to figure out if it's a mistake or if you need to update your W-4 or if your state changed its tax law and nobody told you.

If you plug your numbers into the SalaryHog calculator and compare a 26-paycheck year to a 27-paycheck year in a state like California or Oregon, you'll see the difference immediately. The annual take-home is almost the same — maybe $50 to $100 different depending on rounding — but the per-paycheck amount shifts just enough to be noticeable.

The other thing that makes this feel worse is that it happens in December, which is already an expensive month. If this withholding quirk hit in March, nobody would care. But because it lands right when you're buying plane tickets and gifts and dealing with every subscription service trying to auto-renew at once, that missing $150 feels bigger than it is.

What you're supposed to do about it (which is basically nothing)

There's no real fix for this. You can't adjust your W-4 to account for it, because the W-4 doesn't control state withholding — that's a separate form (usually a state equivalent, like California's DE 4 or Oregon's OR-W-4), and those forms don't have a box for "please don't withhold extra in December because of calendar math."

You could try to claim an extra allowance or exemption on your state withholding form to lower your overall withholding, but then you risk under-withholding the rest of the year and owing money in April, which is arguably worse. The IRS and most states charge penalties for under-withholding if you owe more than $1,000 at tax time, so trying to game the system to smooth out your December paycheck is a bad trade.

The only real option is to just know it's coming. If you're paid biweekly and you live in a state with progressive income tax brackets, check the calendar at the start of the year. If there are 27 pay periods, expect your December paycheck to be lighter. Budget for it. Treat it like the financial equivalent of daylight saving time — annoying, predictable, and not worth the energy to fight.

Or, I guess, move to a state with a flat income tax or no income tax. But that seems like an extreme solution to a problem that costs you maybe $150 once every few years. Then again, people have moved for less.