Most employees glance at the "net pay" number and move on. But the rest of your pay stub contains information that directly affects your taxes, benefits, and retirement — and errors in it cost you money. Here's how to read every line.
The Big Picture: Gross vs. Net
Gross Pay: What you earned before any deductions. This is your base salary or hourly rate × hours worked, plus any overtime, bonuses, or commissions.
Net Pay: What actually gets deposited. Gross pay minus all deductions. The gap between these two numbers is everything this article explains.
The Main Sections of a Pay Stub
1. Earnings
This section shows how your gross pay was calculated:
| Item | What It Means | | ------------ | ------------------------------- | | Regular | Base pay for standard hours | | Overtime | Hours over 40/week at 1.5× rate | | Bonus | Any bonus payment this period | | Commission | Sales-based earnings | | Holiday Pay | Pay for company holidays | | PTO/Vacation | Paid time off used |
Check that your hourly rate and hours are accurate. Overtime miscalculations are a common employer error.
2. Federal Tax Withholding
Federal Income Tax (FIT): Your employer withholds this based on your W-4 and your pay. The amount depends on your filing status, pay frequency, and any additional withholding you requested. Your W-4 controls this — if you consistently owe or get a large refund at tax time, adjusting your W-4 fixes it.
Social Security Tax: 6.2% of your gross wages, up to the annual wage base ($168,600 in 2024). Your employer matches this.
Medicare Tax: 1.45% of all gross wages (no cap). An additional 0.9% applies to wages over $200,000 (single) or $250,000 (married). Your employer matches the base 1.45%.
These three together are called FICA taxes (Federal Insurance Contributions Act). They total 7.65% of your gross pay up to the Social Security cap.
3. State and Local Tax Withholding
State Income Tax: Depends on your state. Some states (Texas, Florida, Washington) have no income tax. Others range from 2–13%. Your state W-4 equivalent controls this.
Local/City Tax: Some cities (New York City, Philadelphia, San Francisco) have additional local income taxes. Check if your city does.
State Disability Insurance (SDI): States like California, New Jersey, and New York withhold a small percentage for state disability programs.
State Unemployment Insurance (SUI): Typically paid by the employer, not the employee. If you see it on your stub, verify with HR.
4. Pre-Tax Deductions
These reduce your taxable income — dollar-for-dollar — before taxes are calculated, making them especially valuable:
- 401(k) / 403(b) contributions: Your retirement savings. Traditional 401(k) reduces federal and most state taxes now; Roth 401(k) doesn't reduce taxes now but grows tax-free.
- Health insurance premiums: What you pay for employer-sponsored health, dental, and vision.
- HSA contributions: Health Savings Account deposits (pre-tax, tax-free growth, tax-free withdrawals for medical expenses).
- FSA contributions: Flexible Spending Account — use-it-or-lose-it funds for medical or dependent care expenses.
- Commuter benefits: Transit or parking contributions.
- Life insurance premiums: Employer-sponsored life coverage (first $50,000 is employer-paid; additional coverage may show here).
5. Post-Tax Deductions
These come out after taxes are calculated — no tax benefit:
- Roth 401(k): After-tax retirement contributions
- Charitable payroll deductions: If you set up automatic donations through your employer
- Union dues: If applicable
- Wage garnishments: Court-ordered deductions for child support, student loans, or debt
6. Employer Contributions (Informational)
Your pay stub may show what your employer contributes on your behalf — these aren't deductions from your pay, just informational:
- Employer 401(k) match: What your company adds to your retirement account
- Employer health insurance: The share your employer pays (often much larger than your portion)
- Employer FICA: Their matching 6.2% Social Security and 1.45% Medicare
Year-to-Date (YTD) Columns
The YTD column is critical. It shows cumulative totals for the year, which helps you:
- Track Social Security cap: Once your YTD wages hit the Social Security wage base, that withholding stops
- Verify annual totals: Cross-reference with your W-2 at year end
- Track 401(k) contributions: Make sure you're on track for your annual goal
- Spot errors: If a deduction looks wrong in YTD, investigate
Common Pay Stub Errors
- Wrong hourly rate after a raise
- Missing overtime or miscalculated overtime rate
- Benefits deduction continues after you changed plans
- Wrong W-4 reflected (filing status, extra withholding)
- 401(k) contribution not matching what you elected
- Double deduction for the same benefit
- HSA deduction not showing up despite your enrollment
If you find an error, contact payroll in writing. Keep a record.
Got a pay stub, W-2, or tax document you want decoded line by line? PaperLens reads any financial document and explains it in plain English. Scan your document →