How to Read Your Paycheck Stub: Complete Guide to Every Line

Your paycheck stub is a detailed record of exactly how your employer calculated your pay — and exactly where every dollar went before it reached your bank account. Yet most workers glance at the net pay amount and ignore the rest. Understanding each line on your paycheck stub helps you catch errors, optimize your tax withholding, verify your benefits deductions, and make better financial decisions. This guide breaks down every section, line by line.

Written by Sarah Mitchell, CPA

Paycheck Stub Overview: The Two Key Numbers

Every paycheck stub revolves around two figures:

• Gross Pay — The total amount you earned before any deductions. This is what you'd receive if taxes and benefits didn't exist.
• Net Pay — The amount actually deposited into your bank account (or printed on your check). This is gross pay minus all deductions.

The difference between these two numbers is everything that gets taken out: federal taxes, state taxes, FICA (Social Security and Medicare), retirement contributions, health insurance premiums, and any other deductions. Let's examine each one.

Section 1: Gross Pay (Earnings)

The earnings section shows how your gross pay was calculated. For hourly employees, this includes hours worked multiplied by your hourly rate. For salaried employees, it shows your salary divided across pay periods.

Common Earnings Line Items

If you're an hourly employee, always verify that the hours shown match your own records. Use our time card calculator to independently calculate your expected hours and catch discrepancies before they compound across pay periods.

Checking Your Hourly Rate

If you're salaried, your stub may show an "hourly equivalent" or simply your periodic salary amount. To verify, divide your annual salary by the number of pay periods per year. For a biweekly pay schedule (26 periods), a $65,000 salary should show $2,500 per paycheck. Use our salary to hourly converter to double-check the math.

Section 2: Federal Income Tax Withholding

The largest deduction for most workers is federal income tax. Your employer withholds this based on the information you provided on IRS Form W-4 when you were hired (or most recently updated).

How Withholding Is Calculated

Your employer uses IRS Publication 15-T (Federal Income Tax Withholding Methods) to determine how much to withhold. The calculation considers your filing status (single, married filing jointly, head of household), the number of allowances or adjustments you claimed, any additional withholding you requested, and your gross pay for the period.

The federal income tax system is progressive, meaning different portions of your income are taxed at different rates. For 2024, the brackets for a single filer are:

Common Issues

If you're consistently getting large tax refunds (over $1,000), you're likely over-withholding — essentially giving the IRS an interest-free loan. Consider updating your W-4 to increase your take-home pay. Conversely, if you owe a large amount at tax time, increase your withholding or add an extra flat dollar amount per paycheck on your W-4.

Section 3: State and Local Income Tax

Most states impose their own income tax in addition to federal tax. Your stub will show a separate line for state tax withholding. The rate varies dramatically by state — from 0% in states like Texas, Florida, and Washington, to over 13% for high earners in California.

Some cities and counties also levy local income taxes. Workers in New York City, for example, pay city tax rates ranging from 3.078% to 3.876% on top of New York state tax. If your stub shows a "local" or "city" tax line, that's what it represents.

Multi-State Workers

If you live in one state and work in another, you may see withholding for both states. Most states have reciprocity agreements that prevent double taxation, but you should verify that your employer is withholding correctly, especially if you recently moved or started working remotely from a different state.

Section 4: FICA Taxes (Social Security and Medicare)

FICA stands for the Federal Insurance Contributions Act. These are mandatory payroll taxes that fund Social Security and Medicare. Unlike income tax, FICA rates are flat and apply to virtually all employees.

Social Security Tax

The Social Security tax rate is 6.2% of gross wages, up to the annual wage base limit ($168,600 in 2024). Your employer pays an additional 6.2%, for a combined 12.4%. Once your year-to-date earnings exceed the wage base, Social Security tax stops being withheld for the remainder of the year. You'll see $0.00 on this line for those later paychecks.

Medicare Tax

The Medicare tax rate is 1.45% of all gross wages — there is no wage base cap. Your employer matches this with another 1.45%. Additionally, if you earn over $200,000 individually (or $250,000 for married filing jointly), an extra 0.9% Additional Medicare Tax applies to earnings above that threshold. Your employer does not match this additional amount.

FICA on Your Stub

You'll typically see two separate lines:

• Social Security (OASDI): 6.2% × gross pay (example: $2,225 × 6.2% = $137.95)
• Medicare (HI): 1.45% × gross pay (example: $2,225 × 1.45% = $32.26)

Combined, FICA takes 7.65% of your gross pay before the Social Security cap is reached. On a $50,000 salary, that's $3,825 per year in FICA taxes alone.

Section 5: Pre-Tax Deductions

Pre-tax deductions are subtracted from your gross pay before income taxes are calculated, effectively reducing your taxable income. These are some of the most valuable items on your stub.

401(k) / 403(b) Retirement Contributions

If you contribute to an employer-sponsored retirement plan, your contribution appears here. For 2024, the employee contribution limit is $23,000 ($30,500 if you're 50 or older). A 6% contribution on a $65,000 salary means $150 per biweekly paycheck goes to your 401(k) and is not subject to federal or state income tax. This directly reduces your taxable income — if your marginal tax rate is 22%, that $150 contribution saves you $33 in taxes per paycheck.

Health Insurance Premiums

Most employer-sponsored health insurance premiums are deducted pre-tax through a Section 125 cafeteria plan. Your stub may show separate lines for medical, dental, and vision premiums. The amount shown is your employee share — your employer typically pays a larger portion that doesn't appear on your stub. According to the Kaiser Family Foundation, the average annual premium for employer-sponsored family coverage in 2023 was $23,968, with employees paying an average of $6,575 (about $252 per biweekly paycheck).

Other Pre-Tax Deductions

• HSA contributions: Health Savings Account contributions for high-deductible health plans (2024 limit: $4,150 individual / $8,300 family)
• FSA contributions: Flexible Spending Account for healthcare or dependent care expenses ($3,200 limit in 2024)
• Commuter benefits: Pre-tax transit or parking passes (up to $315/month in 2024)

Section 6: Post-Tax Deductions

Post-tax deductions come out of your pay after taxes have been calculated. They don't reduce your taxable income.

• Roth 401(k) contributions: Taxed now, but withdrawals in retirement are tax-free.
• Life insurance premiums: Employer-provided coverage over $50,000 in value is taxable; any excess premium shows as a post-tax deduction.
• Disability insurance: Short-term and long-term disability premiums (if employee-paid).
• Garnishments: Court-ordered withholdings for child support, student loans in default, or tax levies.
• Union dues: Membership fees for union workers.

Section 7: Year-to-Date (YTD) Totals

The YTD column on your stub is a running total of each line item from January 1 through the current pay period. This is critical for several reasons:

• Tax planning: Your YTD gross income tells you approximately where you'll land at year-end, helping you assess whether your withholding is on track.
• Social Security cap: Monitor your YTD Social Security wages to know when you'll hit the $168,600 cap and stop paying the 6.2% tax.
• Retirement limits: Track your YTD 401(k) contributions to avoid exceeding the $23,000 annual limit.
• W-2 verification: At year-end, your YTD totals from your last paycheck of the year should match (or closely approximate) the figures on your W-2.

Section 8: Net Pay — Your Take-Home Amount

After all deductions, the remaining amount is your net pay. This is the amount deposited into your bank account (or written on your physical check). Here's a realistic example showing the full journey from gross to net:

In this example, $863.60 — about 36% of gross pay — went to taxes and deductions. This is typical for a middle-income worker. Use our payroll calculator to model your own gross-to-net calculation.

How to Verify Your Paycheck Stub

Payroll errors happen more often than you might think. The IRS estimates that 33% of employers make payroll mistakes each year. Here's a checklist for verifying your stub:

1. Verify hours: Compare the hours on your stub to your personal time records. Our work hours calculator can help you calculate expected hours independently.
2. Check your rate: Confirm your hourly rate or salary amount hasn't changed unexpectedly.
3. Review overtime: Ensure overtime hours are paid at 1.5x (or applicable rate) and that the threshold is correct (40 hours/week, or 8 hours/day in states like California).
4. Confirm tax withholding: If your filing status or allowances changed, verify the new withholding amount.
5. Audit benefit deductions: Match health insurance and retirement deductions against your enrollment documents.
6. Check YTD totals: Compare to your last pay stub to ensure no irregularities.

What to Do If You Find an Error

If something doesn't look right, act promptly. Notify your HR department or payroll administrator in writing (email creates a record). Reference the specific pay period, the line item in question, and what you believe the correct amount should be. Employers are legally required to correct payroll errors. Under the FLSA, if you've been underpaid, you're entitled to back pay for up to two years (three years if the violation was willful).

Keep copies of all your paycheck stubs for at least three years. They're essential documentation if you ever need to dispute pay, apply for a mortgage, or file an amended tax return.