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Your pay stub has a lot of numbers. Most people ignore it. But understanding every line can help you catch errors, plan your budget, and make smarter choices about your benefits. Here is a plain-English guide to what every line on your pay stub means.
Gross Pay vs Net Pay
These are the two most important numbers on your pay stub.
- Gross pay: Your total earnings before any deductions. If you earn $60,000/year and are paid biweekly, your gross pay per check is $2,307.69.
- Net pay: What actually hits your bank account after all taxes and deductions are taken out. Also called “take-home pay.”
The gap between gross and net surprises many people, especially when they start a new job.
Federal Income Tax Withholding
This is the biggest deduction for most workers. The amount withheld depends on:
- Your income level
- Your filing status (single, married, head of household)
- The allowances and extra withholding you listed on your W-4
You can adjust how much is withheld by updating your W-4 with your employer. See our full guide on how to fill out a W-4.
State Income Tax
Most states have their own income tax. The rate depends on your state and income level. A few states — like Florida, Texas, and Nevada — have no state income tax, so this line will be blank on pay stubs in those states.
FICA Taxes
FICA stands for Federal Insurance Contributions Act. It covers two separate taxes:
Social Security Tax
Rate: 6.2% of your gross wages. You pay this. Your employer matches it. The wage base limit for 2026 is $176,100. Once your earnings exceed that, Social Security tax stops for the year.
Medicare Tax
Rate: 1.45% of all wages — no cap. If you earn over $200,000 ($250,000 for married filing jointly), an additional 0.9% Medicare surtax applies.
Tax rates as of May 2026.
Pre-Tax Deductions
These come out before federal income tax is calculated. They lower your taxable income, which is why they are valuable.
401(k) or 403(b) Contributions
Your retirement contributions. If you contribute 6% of your salary to your 401(k), that 6% reduces your taxable income. You do not pay income tax on it now — you pay it when you withdraw in retirement.
Health Insurance Premiums
Your share of your employer-sponsored health insurance premium. Often pre-tax, which saves you money.
HSA Contributions (Health Savings Account)
If you have a high-deductible health plan, your HSA contributions come out pre-tax too. Triple tax advantage: pre-tax going in, tax-free growth, tax-free for qualified medical expenses.
FSA Contributions (Flexible Spending Account)
Like an HSA but with a “use-it-or-lose-it” rule. Comes out pre-tax. Good for predictable medical or childcare expenses.
Dental and Vision Premiums
Usually pre-tax. Taken out alongside health insurance premiums.
Post-Tax Deductions
These come out after taxes are calculated. They do not reduce your taxable income.
- Roth 401(k) contributions: After-tax now, tax-free in retirement
- Life and disability insurance premiums: Often post-tax
- Wage garnishments: Court-ordered deductions for child support or debt repayment
Year-to-Date (YTD) Figures
The YTD column shows totals from January 1 to the current pay period. Check these to verify:
- You are on track for your 401(k) annual contribution limit ($23,500 for 2026)
- Your Social Security tax stopped when you hit the wage base limit
- Total taxes withheld align with what you will owe
What to Do If You Find an Error
Errors happen. Common ones include wrong deduction amounts, incorrect overtime calculations, and benefits charges that should not be there. If something looks wrong:
- Contact your HR or payroll department immediately
- Have your pay stub in hand when you call
- Request a corrected pay stub in writing
To build a full picture of your finances, track your net worth using our net worth calculator. Use your take-home pay as the foundation of a 50/30/20 budget.
Frequently Asked Questions
Why is my net pay so much lower than my salary?
Federal income tax, state income tax, Social Security, and Medicare taxes reduce gross pay significantly. Pre-tax benefits like 401(k) contributions and health insurance premiums also reduce the check. Together, these can take 25-35% or more off a middle-income paycheck.
What does OASDI mean on my pay stub?
OASDI stands for Old-Age, Survivors, and Disability Insurance. It is the formal name for the Social Security tax. The rate is 6.2% of your wages up to the annual wage base limit.
How do pre-tax deductions save me money?
Pre-tax deductions lower your taxable income before federal income tax is calculated. For example, if you earn $60,000 and contribute $5,000 to a pre-tax 401(k), you only pay federal income tax on $55,000. This can save you several hundred to over a thousand dollars in taxes per year, depending on your tax bracket.
Should I review my pay stub every paycheck?
Yes, at least occasionally. Check when you start a new job, after open enrollment, after a raise, or at the beginning of the year. Errors in payroll are more common than most people think, and catching them early is much easier than resolving them months later.
What is the 401(k) contribution limit for 2026?
The 401(k) employee contribution limit for 2026 is $23,500. Workers age 50 and over can contribute an additional $7,500 as a catch-up contribution, for a total of $31,000. Figures as of May 2026.