Your First Job: A Teen's Money Checklist for Pay, Taxes and Saving (2026)
The first paycheck is a teen's first real money lesson. Here's how to get the rules, the paperwork, the taxes and the saving right from day one.
๐ On this page โผ
๐ Verified Sep 29, 2026 against the Labor Department's federal youth employment rules, IRS guidance on Form W-4, payroll taxes, filing requirements and 2026 limits, and FTC and FDIC consumer guidance. States can set stricter hour limits and higher minimum wages, and the stricter rule applies. How we check numbers โ
A first job comes with rules and paperwork worth getting right: know your hour limits if you're 14 or 15, fill out your W-4 carefully, and check every pay stub. Most teens owe no federal income tax on job income under $16,100 in 2026, though Social Security and Medicare still come out. Save part of every paycheck, and consider a custodial Roth IRA.
Numbers That Matter
| Rule or figure | What it says | Source | Verified |
|---|---|---|---|
| Hours at 14 and 15 | Outside school hours only: up to 3 hours on a school day and 18 in a school week, 8 on a non-school day and 40 in a non-school week, between 7 a.m. and 7 p.m. (9 p.m. from June 1 through Labor Day) | DOL YouthRules | Sep 29, 2026 |
| Ages 16 and 17 | No federal limit on hours in non-hazardous jobs; where state rules are stricter, the stricter standard applies | DOL FLSA Advisor | Sep 29, 2026 |
| Minimum wage | $7.25 federal minimum; employers may pay $4.25 to workers under 20 during their first 90 consecutive calendar days | DOL YouthRules | Sep 29, 2026 |
| Federal income tax | Standard deduction $16,100 for 2026 (single): a teen whose only income is from a job generally owes no federal income tax below it, but may file to get withheld tax back | IRS Publication 501 | Sep 29, 2026 |
| Payroll taxes | Social Security (6.2%) and Medicare (1.45%) come out of most paychecks at any age | IRS Topic 751 | Sep 29, 2026 |
| Custodial Roth IRA | Contributions up to your earned income, capped at $7,500 for 2026 | IRS IR-2025-111 | Sep 29, 2026 |
| Job scams | Real employers don't charge you to get a job or ask you to deposit a check and send money back | FTC consumer advice | Sep 29, 2026 |
Before You Start: The Work Rules
Federal law lets most teens start work at 14. At 14 and 15, you can work only outside school hours, with the daily and weekly limits above, and only in non-hazardous jobs such as retail, food service and office work. At 16 and 17, there's no federal limit on hours, though hazardous jobs are still off-limits. Your state may add its own limits or require a work permit, so check before your first shift.
First-Day Paperwork
- Form W-4: tells your employer how much federal income tax to withhold. You can claim exemption only if you owed no federal income tax last year and expect to owe none this year; it expires each year.
- Proof you can work: your employer will ask for identity and work-eligibility documents.
- Direct deposit: a checking account gets you paid faster and cheaper than cashing checks. Under 18, you may need a parent as a co-owner; bank deposits are FDIC-insured up to $250,000.
Reading Your First Paycheck
Gross pay is hours times your rate. Net pay is what's left after Social Security (6.2%), Medicare (1.45%), any federal or state income tax withheld, and any other deductions. Check every stub: are the hours right, is the rate right, and do the deductions make sense? Mistakes are easiest to fix right away.
Taxes in Plain English
- Income tax: if your only income is from a job, you generally won't owe federal income tax on earnings up to $16,100 in 2026.
- Filing: you must file if your earned income tops that amount, and it's worth filing anyway if income tax was withheld, to get it back.
- Your W-2: your employer must send it by January 31; keep it for filing.
- Working for a parent's business: different payroll-tax rules can apply; ask the parent's tax preparer.
What to Do With the Money
- Pick a split before the first check. For example: some to spend, some to save for goals, some for the long term.
- Build a small cushion. A few hundred dollars in savings covers a phone repair or a missed shift.
- Start a custodial Roth IRA. With earned income, you can contribute up to what you earned, capped at $7,500 for 2026. Contributions can come back out without tax or penalty, and growth is tax-free in retirement.
- Watch for scams. Pay-to-apply jobs and "deposit this check and send some back" offers are fraud; see our guide to job scams.
Worked Example: A 16-Year-Old's First Year
- Hours: 15 hours a week for 40 school weeks plus 30 a week for 10 summer weeks = 900 hours, or $13,500 gross.
- Payroll taxes: 7.65% for Social Security and Medicare = $1,032.75.
- Federal income tax: $0 owed, since $13,500 is under the $16,100 standard deduction; any income tax withheld comes back by filing a return.
- The long game: putting $2,000 of it in a custodial Roth IRA, at a 6% average return, could grow to about $34,755 tax-free by age 65.
Illustrative; returns aren't guaranteed, and state taxes and rules vary.
Decision Rules
If this, then that
- If you're 14 or 15 โ keep within the federal hour limits and check your state's rules and work-permit requirements.
- If you owed no income tax last year and expect none this year โ you may claim exempt on your W-4; otherwise, fill it out normally.
- If income tax is withheld โ file a return to get it back.
- If you have earned income โ consider a custodial Roth IRA with a parent.
- Always โ check every pay stub and never pay to get a job.
Mistakes to avoid
- Working past your hour limits because a manager asks.
- Claiming exempt on the W-4 when you'll owe tax.
- Skipping a tax return when income tax was withheld.
- Spending every paycheck in full.
- Falling for pay-to-apply or check-deposit job scams.
Related: finance for teenagers, kid account comparison, job scams, the cost of raising a child and the Budgeting & Saving hub.