How to Read a Pay Stub: Gross Pay, Taxes, Deductions, and Net Pay
A pay stub explains how an employer calculated a paycheck. It shows what an employee earned, what was taken out, and how much remained for direct deposit or a paper check.
Reviewing each pay stub can help catch incorrect hours, missing overtime, benefit errors, and unexpected deductions before they continue for several pay periods.
Pay stub requirements and deduction rules vary by state, so the layout and information provided may differ by employer and location.
Begin With the Pay Period and Pay Date
The pay period shows the dates covered by the paycheck. The pay date is the day the money is issued.
These dates are not always the same. For example, a paycheck dated October 16 may cover work completed from September 28 through October 11.
Confirm that the pay period is correct before checking hours or rates. Recently completed work may appear on the following paycheck if it falls outside the listed period.
Check Your Personal and Tax Information
The top of the pay stub usually includes:
Employee name
Employee identification number
Employer name
Pay period
Pay date
Work location or department
Tax filing information
For privacy, Social Security numbers and bank account numbers should normally be partly hidden.
If your name, address, work location, or tax withholding information is incorrect, contact payroll or human resources. A wrong work location can sometimes affect state or local tax withholding.
Review Hours and Pay Rates
Hourly employees should compare the pay stub with their time records. Look for separate lines showing:
Regular hours
Overtime hours
Holiday pay
Paid sick leave
Vacation or paid time off
Bonuses
Commissions
Tips
Shift differentials
Multiply the number of hours by the listed rate to see whether the earnings amount makes sense.
For example, 40 regular hours at $20 per hour should produce $800 in regular wages before taxes and deductions. Overtime, bonuses, or other earnings would be added separately.
Under the federal Fair Labor Standards Act, covered nonexempt employees generally must receive at least one and one-half times their regular rate for hours worked beyond 40 in a workweek. State law may provide additional protections, and some employees are exempt from federal overtime requirements.
Understand Gross Pay
Gross pay is the total amount earned before taxes and deductions are removed.
It may include:
Regular wages or salary
Overtime
Bonuses
Commissions
Reported tips
Paid leave
Other taxable compensation
Gross pay for the current period applies only to that paycheck. Year-to-date gross pay shows the total recorded since the beginning of the year.
Do not confuse gross pay with taxable wages. Certain benefit contributions can reduce the wages subject to a particular tax, so the federal taxable wage, Social Security wage, and Medicare wage amounts may not all match gross pay.
Read the Tax Withholding Section
A pay stub commonly shows several types of taxes.
Federal Income Tax
Federal income tax withholding is based partly on earnings and the information provided on Form W-4. It may appear as:
Federal income tax
FIT
FITW
Fed tax
Federal withholding
Withholding is a payment toward the employee’s expected annual federal tax bill. It is not necessarily the employee’s final tax liability.
The IRS Tax Withholding Estimator can help employees review withholding after a new job, marriage, divorce, second job, major income change, or change in dependents.
Social Security Tax
Social Security tax may be labeled Social Security, OASDI, or FICA Social Security.
The employee rate is 6.2% of covered wages up to an annual wage limit. For 2026, the Social Security taxable maximum is $184,500. The limit can change each year.
Employers generally pay a separate matching amount that does not come out of the employee’s paycheck.
Medicare Tax
The employee Medicare tax rate is generally 1.45% of covered wages, with no annual wage limit. Employers normally pay a separate matching amount.
Employers must also withhold an additional 0.9% Medicare tax after paying an employee more than $200,000 in wages during the calendar year. The employee’s final Additional Medicare Tax liability can depend on filing status and combined earnings.
Current rates are explained in IRS Topic No. 751.
State and Local Taxes
Depending on the work location and residence, a pay stub may include:
State income tax
City or county income tax
State disability contributions
Paid family leave contributions
Local occupational taxes
Other state payroll programs
Not every state imposes an individual income tax. Employees who work in one state and live in another may see additional entries.
Separate Pre-Tax and After-Tax Deductions
A deduction is money removed from gross pay for a benefit, obligation, or other authorized purpose.
Pre-Tax Deductions
A pre-tax deduction is taken before one or more taxes are calculated. Common examples can include:
Certain health insurance premiums
Traditional 401(k) contributions
Flexible spending account contributions
Health savings account contributions
Qualified commuter benefits
“Pre-tax” does not always mean exempt from every tax. A deduction may reduce federal taxable income without reducing Social Security or Medicare wages.
After-Tax Deductions
After-tax deductions are generally removed after applicable taxes have been calculated. Examples may include:
Roth retirement contributions
Certain life or disability insurance premiums
Union dues
Charitable contributions
Repayment of an employer advance
Some voluntary benefits
Review each label and compare it with the benefits you selected. Ask payroll for an explanation if an abbreviation is unclear.
Recognize Garnishments and Other Required Deductions
Some deductions are required by a court order or government agency. These may include:
Child support
Tax levies
Creditor garnishments
Student loan collections
Other legally required withholding
The description may include the name of an agency or a case number. Keep any notices explaining the amount and your rights.
Federal and state laws limit certain deductions and garnishments. For example, the Department of Labor explains that deductions for employer-required uniforms, tools, or shortages cannot reduce covered employees below the required federal minimum wage or cut into required overtime pay.
State laws may offer stronger protections or require the employee’s written authorization for particular deductions.
Find Your Net Pay
Net pay is the amount left after taxes and deductions. It is often called take-home pay.
A simplified calculation is:
Gross pay − taxes − deductions = net pay
The actual calculation may be more detailed because some deductions are taken before particular taxes and others are taken afterward.
If the pay stub shows more than one deposit account, the net pay may be divided among checking, savings, or payroll-card accounts. Confirm that the combined deposits match the listed net pay.
Compare Current and Year-to-Date Amounts
Most pay stubs display two sets of figures:
Current: Amounts for this paycheck
Year to date or YTD: Totals since the beginning of the calendar year
Year-to-date figures help employees track total earnings, retirement contributions, taxes, and benefit costs. They can also reveal errors that are difficult to notice from one paycheck alone.
Compare the final pay stub of the year with Form W-2 when it arrives. Some amounts may not match exactly because the forms categorize wages and benefits differently, but unexplained differences should be discussed with payroll.
Review Employer Contributions
Some pay stubs show amounts paid by the employer, such as:
Retirement matching contributions
Employer-paid insurance
Health savings account contributions
Employer Social Security and Medicare taxes
These amounts may be listed for information but are not necessarily deducted from the employee’s pay. Do not include them when trying to calculate net pay unless the stub clearly identifies them as employee deductions.
What to Check on Every Pay Stub
A quick review should confirm:
The correct pay period
The correct number of hours
The correct hourly rate or salary
Any overtime, bonus, commission, or shift pay
The expected paid leave
Benefit elections and retirement contributions
Tax withholding
Any new or changed deduction
The correct direct-deposit amount
Reasonable year-to-date totals
Keep personal time records, schedules, commission reports, and benefit enrollment confirmations. These documents can help payroll investigate a difference.
What to Do If Something Looks Wrong
Contact payroll or human resources promptly and identify the exact line in question. Ask:
What does this abbreviation mean?
How was this amount calculated?
Which hours or dates are included?
Is this deduction pre-tax or after-tax?
Was the deduction authorized?
When will a correction appear?
Will the employer provide a corrected pay stub?
Make the request in writing and keep copies of the pay stub, time records, and response.
If an employer does not correct a possible wage violation, workers can contact the appropriate state labor agency or the U.S. Department of Labor’s Wage and Hour Division. The applicable rules and filing deadlines depend on the type of problem and jurisdiction.
