| Pay stub components | Earnings, deductions, net pay |
| Social Security tax rate (employee) | 6.2% of wages up to annual wage base (IRS Publication 15) |
| Medicare tax rate (employee) | 1.45% of all wages (no cap) (IRS Publication 15) |
| States with no income tax | 9 states (Tax Foundation) |
| Employer FICA match | Dollar-for-dollar on Social Security and Medicare (IRS) |
| W-4 purpose | Controls federal income tax withholding amount (IRS) |
Your Pay Stub at a Glance
A pay stub is your employer's formal record of what you earned, what was withheld, and what you actually received. Most employees glance at the bottom-line deposit amount and move on — but the lines above it contain information that directly affects your budget, your taxes, and your retirement. Understanding each section takes about five minutes and can save you from costly surprises come April.
| Pay stub components | Earnings, deductions, net pay |
| Social Security tax rate (employee) | 6.2% of wages up to annual wage base (IRS Publication 15) |
| Medicare tax rate (employee) | 1.45% of all wages (no cap) (IRS Publication 15) |
| States with no income tax | 9 states (Tax Foundation) |
| Employer FICA match | Dollar-for-dollar on Social Security and Medicare (IRS) |
| W-4 purpose | Controls federal income tax withholding amount (IRS) |
Pay stubs typically divide into three zones: earnings (what you made), deductions (what was taken out), and net pay (what you keep). Some stubs also show year-to-date (YTD) columns alongside current-period figures — a running total since January 1 that's particularly useful for tracking progress toward retirement contribution limits.
If any line on your stub looks unfamiliar or the math doesn't add up, contact your HR or payroll department promptly. Errors do happen, and catching them early is much easier than correcting them retroactively.
Earnings: The Top Section
The earnings section lists every source of compensation before anything is removed. Common line items include:
- Regular/Base Pay: Your standard hourly rate multiplied by hours worked, or your salary divided by the number of pay periods in the year.
- Overtime Pay: Hours beyond 40 in a workweek are typically paid at 1.5× your regular rate under federal law, though some states set higher thresholds.
- Bonus / Commission: Variable pay tied to performance. These amounts are fully taxable and may push you into a higher withholding bracket for that period.
- Reimbursements: Expense reimbursements (mileage, travel) under an accountable plan are generally not taxable and may appear separately.
Gross pay is the total of all earnings before any deductions. This is the number your employer reports to the IRS — not your take-home amount.
Tax Withholdings: Federal, State, and Local
Tax lines are usually the largest deductions on a stub. They are not optional — employers are legally required to withhold them on your behalf.
Gross Pay
Your total earnings before any taxes or deductions are removed. This is the figure your employer reports as your wages to the IRS.
Net Pay
The amount you actually receive after all taxes and deductions are subtracted from gross pay. Also called take-home pay.
FICA
The Federal Insurance Contributions Act taxes — Social Security (6.2%) and Medicare (1.45%) — withheld from every paycheck. Your employer matches these amounts separately.
Pre-Tax Deduction
A benefit contribution subtracted from your gross pay before income taxes are calculated, reducing your taxable income for the period.
Year-to-Date (YTD)
A running total of earnings, taxes, or deductions accumulated from January 1 of the current calendar year through the current pay period.
W-4
The IRS form you complete when starting a job that tells your employer how much federal income tax to withhold from each paycheck.
- Federal Income Tax: Calculated based on your gross wages, pay frequency, and the filing status and allowances you specified on your W-4 form. If this line looks unexpectedly high or low, your W-4 elections may need revisiting. See how W-4 settings affect your take-home pay for a detailed walkthrough.
- Social Security Tax (OASDI): A flat 6.2% of wages up to the annual wage base (which the IRS adjusts periodically). Once you hit that cap for the year, this line drops to zero.
- Medicare Tax: A flat 1.45% of all wages, with no cap. Higher earners may also see an Additional Medicare Tax of 0.9% once income exceeds IRS thresholds.
- State Income Tax: Varies by state. Nine states currently have no state income tax; others range from low flat rates to graduated brackets exceeding 10%.
- Local / City Tax: Some municipalities — particularly in Ohio, Pennsylvania, Kentucky, and New York City — levy their own income taxes. Check your stub if you live or work in a major metro.
Together, Social Security and Medicare taxes are called FICA taxes. Your employer matches your FICA contributions dollar-for-dollar on their own tax return — you do not see that employer portion on your stub.
Pre-Tax and Post-Tax Deductions
Beyond government taxes, your employer may deduct amounts for benefits you've elected. The key distinction is when in the tax calculation the deduction occurs.
Pre-tax deductions reduce your taxable gross income before federal (and often state) income tax is calculated, lowering your tax bill:
- 401(k) or 403(b) retirement contributions
- Health, dental, and vision insurance premiums (under a Section 125 plan)
- Flexible Spending Account (FSA) or Health Savings Account (HSA) contributions
- Dependent care FSA contributions
Post-tax deductions come out after taxes have been calculated and do not reduce your taxable income:
- Roth 401(k) contributions (taxed now, tax-free in retirement)
- Life insurance premiums above IRS limits
- Wage garnishments ordered by a court
- Voluntary charitable contributions through payroll
Understanding which bucket each deduction falls into helps you budget your spending categories accurately. It also explains why two employees with identical salaries can have very different net pay figures based on their benefit elections.
Pre-Tax Deductions Reduce Your Taxable Income
When you contribute to a traditional 401(k) or pay health insurance premiums through a Section 125 plan, those dollars are removed from gross pay before federal income tax is calculated. That means you're taxed on a lower income figure for that period. Over a full year, pre-tax benefit elections can meaningfully reduce your total federal tax liability — though the exact impact depends on your tax bracket and filing situation. Consult a tax professional for personalized guidance.
Net Pay and What to Do With This Information
Net pay — sometimes labeled "Take-Home Pay" or "Amount Deposited" — is what lands in your bank account after all taxes and deductions are subtracted from gross pay. This is your real working income for budgeting purposes.
Reviewing your stub each pay period is a simple habit with real payoff:
- Verify your hours or salary. Payroll systems can have data-entry errors.
- Check that benefit deductions match your elections. An enrollment change that didn't process correctly is a common issue.
- Watch your YTD figures. Confirm you're not over-contributing to an HSA or approaching the 401(k) annual limit earlier than intended.
- Notice your effective tax rate. Divide total taxes withheld by gross pay to get a rough effective rate — useful context when planning for a raise or freelance income.
If you find that your paycheck consistently disappears before the next one arrives, that's a separate but related problem. Spending patterns and structural habits are often at the root. And if financial terminology in general still feels unfamiliar, a plain-language glossary of everyday money terms is a good companion reference.
This article is for general informational purposes only and does not constitute tax, legal, or financial advice. For guidance specific to your situation, consult a qualified tax professional or licensed financial adviser.