How to Read Your Pay Stub: Gross Pay, Taxes and Deductions Explained

Where does your paycheck go? A line-by-line guide to the taxes and deductions on a U.S. pay stub, and the mistakes worth catching.

Your pay stub — sometimes called an earnings statement — shows how your employer gets from what you earned to what lands in your bank account. Reading it carefully helps you understand your taxes, plan your budget and catch errors that could cost you money.

The top section: who, when and how much

• Employer and employee information, often including the last digits of your Social Security number.
• Pay period — the dates you're being paid for — and the pay date.
• Pay rate — your hourly wage or salary — and hours worked, including any overtime.

Gross pay vs. net pay

Gross pay is your total earnings for the period before anything is taken out, including regular wages, overtime, bonuses, commissions and tips. Net pay is what's left after taxes and deductions — your actual take-home pay. The difference between the two is often larger than people expect.

Taxes withheld

Federal income tax

This amount depends on your earnings and the information you gave on your Form W-4, such as your filing status and dependents. Withholding is an estimate of your yearly tax bill. If too much is withheld, you get a refund when you file; too little, and you may owe. The IRS's Tax Withholding Estimator on IRS.gov can help you adjust your W-4.

Social Security tax

Often labeled OASDI or "FICA – SS." You pay 6.2% of your wages, and your employer pays a matching 6.2%. This tax only applies up to an annual wage limit that rises most years.

Medicare tax

Often labeled "FICA – Med." You pay 1.45% of all wages, matched by your employer, with no wage limit. High earners pay an additional 0.9% on wages above a set threshold.

State and local income taxes

Most states have an income tax, and some cities and counties do too. A handful of states have no state income tax on wages. Some states also withhold for programs like disability or paid family leave insurance.

Pre-tax and after-tax deductions

Pre-tax deductions come out before income tax is calculated, lowering your taxable income. Common ones include:

• Traditional 401(k) or 403(b) retirement contributions
• Health, dental and vision insurance premiums through your employer
• Health Savings Account (HSA) and Flexible Spending Account (FSA) contributions
• Some commuter benefits

After-tax deductions come out after taxes. Examples include Roth 401(k) contributions, some life or disability insurance, union dues, charitable payroll giving and wage garnishments such as child support.

Year-to-date (YTD) totals

Most stubs show year-to-date totals for each line. These are useful for tracking how much you've contributed to retirement, checking whether you've hit the Social Security wage limit, and comparing with your Form W-2 at the end of the year.

Employer contributions

Some stubs list benefits your employer pays on your behalf, like a 401(k) match or its share of health premiums. They don't reduce your pay, but they're part of your total compensation — worth remembering when comparing job offers.

Mistakes worth checking

• Hours and overtime: Under federal law, most hourly workers must be paid at least 1.5 times their regular rate for hours over 40 in a workweek. Make sure overtime appears correctly.
• Pay rate: Confirm it matches what you were promised, especially after a raise.
• Deductions: Check that benefit and retirement deductions match what you selected during enrollment.
• Personal details: Your name, address and filing information should be correct.
• Paid time off balances, if listed.

Keep your pay stubs

Save your stubs at least until you've checked them against your year-end W-2 and filed your taxes. Lenders and landlords often ask for recent pay stubs as proof of income, so keeping digital copies is handy.

Tax rates and limits change; see IRS.gov and SSA.gov for current figures. This guide is general information, not tax advice.