Your pay stub arrives every payday, but most people glance at the bottom number and move on. Understanding every line can help you catch errors, plan your taxes, and make smarter financial decisions. Here's a complete walkthrough.
What Is a Pay Stub?
A pay stub (also called a paycheck stub or earnings statement) is a document from your employer showing how your gross pay was calculated and what was deducted to arrive at your net pay — the money you actually take home.
Key Sections of a Pay Stub
1. Gross Pay
This is your total earnings before any deductions. For hourly workers, it's your hourly rate multiplied by hours worked. For salaried employees, it's your annual salary divided by your pay periods (usually 26 for biweekly).
Gross Pay = Hourly Rate × Hours Worked
2. Federal Income Tax Withholding
The IRS requires your employer to withhold federal income tax based on your W-4 elections and current tax brackets. The amount varies based on your filing status (single, married, head of household) and any allowances or additional withholding you've claimed.
3. FICA Taxes
FICA stands for Federal Insurance Contributions Act and covers two taxes:
- Social Security Tax: 6.2% of gross pay (up to the annual wage base, $168,600 for 2024)
- Medicare Tax: 1.45% of all gross pay (plus 0.9% for high earners over $200,000)
Your employer matches both contributions, so the total FICA rate is 15.3% split equally between you and your employer.
4. State and Local Income Tax
If your state has an income tax (9 states don't), your employer withholds it here. Rates vary widely — from under 1% in some states to over 13% in California for high earners.
5. Pre-Tax Deductions
These reduce your taxable income:
- 401(k) contributions — Traditional 401(k) is pre-tax; Roth 401(k) is post-tax
- Health insurance premiums — typically pre-tax under a Section 125 plan
- FSA/HSA contributions — Flexible/Health Savings Accounts
- Commuter benefits
6. Post-Tax Deductions
These come out after taxes are calculated:
- Roth 401(k) contributions
- Life insurance premiums (above $50,000 of coverage)
- Wage garnishments
- Union dues
7. Net Pay
This is the final amount — what hits your bank account or is printed on your paper check.
Net Pay = Gross Pay − All Deductions − All Taxes
Sample Pay Stub Breakdown
| Line Item | Amount |
|---|---|
| Gross Pay (biweekly) | $2,307.69 |
| Federal Income Tax | −$253.85 |
| Social Security (6.2%) | −$143.08 |
| Medicare (1.45%) | −$33.46 |
| State Income Tax | −$92.31 |
| 401(k) Contribution (5%) | −$115.38 |
| Health Insurance | −$120.00 |
| Net Pay | $1,549.61 |
Common Pay Stub Mistakes to Watch For
- Wrong number of hours recorded
- Incorrect pay rate (especially after a raise)
- Missing overtime pay
- Wrong tax filing status
- Benefit deductions that don't match what you signed up for
If you spot an error, notify your HR or payroll department immediately — they can issue a corrected payment.
YTD (Year-to-Date) Section
Most pay stubs also show YTD totals, which are cumulative amounts from January 1 to the current pay period. YTD is helpful for tracking how much you've earned and withheld over the year.
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