Your pay stub shows how your employer calculated your paycheck — gross earnings, every deduction, and your net take-home pay. Understanding each line helps you catch errors, verify your tax withholding, and make sense of your total compensation.
Gross Pay vs. Net Pay
Gross pay is your total earnings before any deductions. Net pay (also called “take-home pay”) is what actually lands in your bank account after all taxes and deductions are subtracted. The gap between the two can be surprisingly large — typically 25-40% for most workers.
Earnings Section
The earnings section lists all the ways you earned money in this pay period:
- Regular/Base pay: Your standard wages — hourly rate times hours worked, or your salary divided by pay periods.
- Overtime: Hours worked beyond 40 per week, paid at 1.5x your regular rate under federal law (some states require overtime for hours beyond 8 per day).
- Bonus/Commission: Any one-time or performance-based pay in this period.
- PTO payout: Paid time off used during this pay period.
- YTD (Year to Date): Most stubs show a YTD column next to each earnings category — total earned from January 1 through this paycheck.
Federal Tax Withholding (Federal Income Tax)
Your employer withholds federal income tax from each paycheck based on your W-4 form. The amount depends on your income, filing status, and any adjustments you listed on the W-4.
This is not your actual tax bill — it is an estimate prepaid throughout the year. When you file your return, you settle up: if too much was withheld, you get a refund; if too little, you owe. Review your withholding annually or after major life changes (marriage, new child, second job).
FICA Taxes: Social Security and Medicare
FICA stands for Federal Insurance Contributions Act. Two taxes are deducted:
- Social Security tax: 6.2% of your gross wages, up to the wage base limit ($176,100 in 2025). Your employer pays a matching 6.2%.
- Medicare tax: 1.45% of all gross wages, no wage cap. An additional 0.9% applies to earnings above $200,000 ($250,000 for married filing jointly).
Total FICA from your check: 7.65%. Self-employed workers pay both the employee and employer share (15.3%) through self-employment tax.
State and Local Income Tax
If your state has an income tax, it will appear here. Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Some cities (New York City, Philadelphia) also levy local income taxes.
Pre-Tax Deductions
Pre-tax deductions come out of your gross pay before taxes are calculated — they reduce your taxable income:
- 401(k) contributions: Traditional 401(k) contributions reduce current taxable income. Roth 401(k) contributions do not.
- Health insurance premiums: Your share of employer-sponsored health insurance is typically deducted pre-tax through a Section 125 cafeteria plan.
- HSA contributions: Health Savings Account contributions made through payroll are pre-tax.
- FSA contributions: Flexible Spending Account contributions for medical or dependent care expenses.
- Dental and vision premiums: Usually pre-tax alongside health premiums.
Post-Tax Deductions
Post-tax deductions come out after taxes are calculated. They do not reduce your taxable income:
- Roth 401(k) contributions
- Life insurance premiums above the employer-provided amount
- Wage garnishments (court-ordered payments for child support or debt)
- Union dues
- Charitable payroll deductions
How to Check for Errors
Payroll errors are more common than most people realize. Check your stub each pay period for:
- Correct hourly rate or salary amount
- Correct number of hours worked (for hourly employees)
- Correct overtime calculation
- Correct 401(k) contribution percentage
- Health insurance premium that matches what you signed up for
- Social Security wages do not exceed the annual wage base
If anything looks wrong, contact HR or payroll immediately. Errors in withholding or contribution amounts can take several pay cycles to correct.
Bottom Line
Your pay stub documents every dollar earned and deducted. Reviewing it each pay period takes two minutes and catches errors before they compound. Understanding the deductions also helps you make smarter decisions about W-4 withholding, 401(k) contributions, and benefit elections.