Most people glance at the bottom-line number on their pay stub and move on. But every line tells you something useful about your earnings, taxes, and benefits. Understanding your pay stub takes five minutes and can reveal errors, help you plan taxes, and show you how small contribution changes affect your take-home pay.
Gross Pay
Gross pay is your total earnings before any deductions. For salaried employees, this is your annual salary divided by the number of pay periods. For hourly employees, it is your hourly rate multiplied by hours worked, plus any overtime.
This number almost always looks bigger than what actually hits your bank account, which is why understanding what comes out matters.
Federal Income Tax Withholding
This is the amount withheld from each paycheck to pay your federal income taxes throughout the year. The amount is based on your W-4 form, which tells your employer how much to withhold based on your filing status and any adjustments you specify.
If your withholding is too low, you will owe taxes when you file. If it is too high, you get a refund, but you have given the government an interest-free loan all year. Use the IRS withholding estimator to check if your withholding is calibrated correctly.
State and Local Income Tax
If your state has an income tax, a portion is withheld each pay period similar to federal withholding. Some cities and counties also have local income taxes. These appear as separate line items.
Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Social Security Tax (OASDI)
You pay 6.2% of your gross wages in Social Security tax, up to the Social Security wage base ($176,100 in 2026). Your employer matches this 6.2% on their end. The label on pay stubs is often “OASDI” (Old-Age, Survivors, and Disability Insurance) or simply “Social Security.”
Once your earnings for the year exceed the wage base, this deduction stops for the rest of the year.
Medicare Tax
You pay 1.45% of all wages in Medicare tax, with no wage cap. High earners pay an additional 0.9% Medicare surtax on wages above $200,000 for single filers ($250,000 for married filing jointly). Your employer also matches the standard 1.45%.
Social Security and Medicare taxes together are called FICA taxes.
401(k) or Retirement Plan Contributions
If you contribute to a workplace 401(k), 403(b), or similar plan, the contribution appears here. Traditional retirement contributions reduce your taxable income, so your federal and state tax withholding goes down slightly when you increase contributions. This means the net cost of contributing is less than the dollar amount withheld.
Check that this number matches what you elected during open enrollment or when you set up your account.
Health Insurance Premiums
Your share of employer-sponsored health insurance comes out of your paycheck, usually pre-tax under a Section 125 cafeteria plan. This reduces your taxable income. Your pay stub may show separate lines for medical, dental, and vision premiums.
FSA or HSA Contributions
If you contribute to a Flexible Spending Account (FSA) or Health Savings Account (HSA), those contributions are withheld here, also pre-tax. HSA contributions are triple tax-advantaged: pre-tax going in, tax-free growth, and tax-free withdrawals for qualified medical expenses.
Life Insurance and Disability Insurance
Employer-sponsored life and disability insurance premiums may appear as separate line items. Employer-paid life insurance premiums on coverage above $50,000 are taxable to you and will show up as imputed income.
Net Pay
Net pay is what actually hits your bank account. It is gross pay minus every deduction listed above. This is your real take-home pay.
Year-to-Date (YTD) Columns
Most pay stubs show both the current period amounts and year-to-date totals. The YTD columns let you check that your annual withholding is on track and that your benefit deductions match what was elected. Review the YTD total for federal withholding near year-end to see if you might owe or receive a large refund.
What to Do If Something Looks Wrong
Errors happen. Common ones include incorrect hourly rates, missed overtime, wrong benefit deductions after a life event, or Social Security withheld above the wage cap. If something does not look right, contact your HR or payroll department with the specific issue and the pay period in question. Keep copies of your pay stubs for at least a year.
Bottom Line
Your pay stub contains everything you need to understand your real compensation, verify that taxes and deductions are correct, and model what changes to your 401(k) contributions or withholding would mean for your paycheck. Take ten minutes to review it line by line at least once a year.