How to Read a Pay Stub: Every Line Item Explained

Your pay stub is more than a deposit receipt — it's a detailed record of your earnings, deductions, and benefits. Understanding each line can help you verify accuracy, optimize your withholding, and make informed decisions about your benefits and retirement contributions.

Gross Pay

Gross pay is your total earnings before any deductions. For salaried employees, it's your annual salary divided by pay periods (24 for twice-monthly, 26 for biweekly). For hourly employees, it's your hourly rate multiplied by hours worked, plus overtime (typically 1.5x for hours over 40/week).

Federal Income Tax Withholding

Based on your W-4 form. If too much is withheld, you get a tax refund — but you've given the government an interest-free loan. If too little is withheld, you owe at tax time. Update your W-4 after major life changes: marriage, divorce, a new child, a second job.

FICA Taxes: Social Security and Medicare

• Social Security: 6.2% of wages up to $176,100 (2026 wage base)
• Medicare: 1.45% of all wages, no cap
• Additional Medicare Tax: 0.9% on wages over $200,000 (single) or $250,000 (married)
• Your employer matches your Social Security and Medicare contributions

State and Local Income Tax

9 states have no income tax (Florida, Texas, Nevada, Washington, Wyoming, South Dakota, Alaska, Tennessee, New Hampshire). If you live in a state with income tax, it appears here. Some cities (NYC, Philadelphia, Detroit) also have local income taxes.

Pre-Tax Deductions (the good ones)

Pre-tax deductions reduce your taxable income, so you pay less in federal and state taxes:

• 401(k) contributions: Reduces taxable income dollar-for-dollar
• Health insurance premiums: Usually pre-tax under a Section 125 plan
• HSA contributions: Triple tax advantage (pre-tax, tax-free growth, tax-free withdrawals for medical expenses)
• FSA contributions: Pre-tax, use it or lose it each year
• Dental and vision premiums: Usually pre-tax

Post-Tax Deductions

These come out after taxes are calculated:

• Roth 401(k) contributions: After-tax now, tax-free in retirement
• Life insurance (amounts over $50,000 coverage)
• Wage garnishments (child support, court-ordered debt repayment)
• Union dues

Year-to-Date (YTD) Totals

The YTD columns show cumulative totals since January 1. Use these to verify: you're on track with 401(k) contributions, you haven't overpaid Social Security (if you've hit the $176,100 wage base, SS withholding should stop), and your total withholding aligns with your expected tax bill.

Common Pay Stub Errors to Watch For

• Wrong pay rate (especially after a raise)
• Missing overtime pay
• Benefits deductions not matching what you enrolled in
• Social Security still being deducted after hitting the wage base
• 401(k) contributions not matching what you elected