How to Read a Pay Stub: A Simple Guide to Every Line Item
You earn $60,000 a year. Your biweekly paycheck should be $2,307.69. But what actually hits your bank account is $1,650. What happened to the other $657?
Your pay stub explains every dollar of that gap. Here's how to read it.
Gross Pay
This is your total earnings before any deductions. For a salaried employee, it's your annual salary divided by the number of pay periods. For hourly workers, it's hours worked times your hourly rate, plus any overtime.
Gross pay is the starting number. Everything else is subtracted from it.
Federal Income Tax Withholding
This is the amount your employer withholds toward your federal income tax liability. The exact amount depends on:
- Your filing status (single, married filing jointly, etc.)
- Your W-4 elections (allowances and additional withholding)
- Your income level and applicable tax brackets
Withholding is not your final tax bill — it's a prepayment. When you file your tax return in April, you reconcile what was withheld against what you actually owe. If too much was withheld, you get a refund. Too little, and you owe.
If your refund is consistently large, you're essentially giving the IRS an interest-free loan. Consider adjusting your W-4 to take home more each paycheck and invest the difference yourself.
Social Security Tax (OASDI)
On your pay stub this appears as "Social Security," "SS," or "OASDI" (Old-Age, Survivors, and Disability Insurance). The rate is 6.2% of your gross wages, up to the Social Security wage base of $176,100 in 2026.
If you earn more than $176,100 in a year, you stop paying Social Security tax on the excess. You'll see this tax disappear from your pay stub partway through the year if you hit the cap.
Medicare Tax
Medicare appears separately as "Medicare" or "Med." The rate is 1.45% on all wages, with no cap. High earners (over $200,000 for single filers) also pay an additional 0.9% Additional Medicare Tax, but employers only withhold this once you cross $200,000 in a calendar year from that employer.
Social Security + Medicare combined are your FICA taxes: 7.65% for most workers.
State Income Tax
If you live in a state with income tax, this line shows your state withholding. Nine states have no income tax at all (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming), so if you're in one of those, this line won't appear or will show $0.
State tax rates range from flat rates (Pennsylvania at 3.07%, Illinois at 4.95%) to progressive rates like California, which can reach 9.3% or higher.
Pre-Tax Deductions
These come out of your paycheck before taxes are calculated, which reduces your taxable income:
- 401(k) or 403(b) contributions: Retirement savings. Your contribution is pre-tax, reducing both federal and state income tax. The 2026 contribution limit is $23,500 ($31,000 if you are 50 or older).
- Health insurance premiums: Your share of employer-sponsored health, dental, and vision coverage. Typically pre-tax under a Section 125 plan.
- HSA contributions: Health Savings Account deposits are pre-tax and also tax-free when spent on qualified medical expenses.
- FSA contributions: Flexible Spending Account deposits for medical or dependent care expenses.
- Commuter benefits: Pre-tax transit passes or parking.
Post-Tax Deductions
These come out after taxes are calculated, so they don't reduce your taxable income:
- Roth 401(k) contributions: Retirement savings made with after-tax dollars. You pay taxes now, but withdrawals in retirement are tax-free.
- Life insurance (above $50,000 of coverage): Employer-provided life insurance over $50,000 is a taxable benefit.
- Wage garnishments: Court-ordered deductions for child support, alimony, or debt collection.
- Union dues: If you are a union member, dues are typically a post-tax deduction.
Net Pay
This is what actually hits your bank account. It's your gross pay minus all taxes and deductions. Net pay is sometimes called "take-home pay."
The formula: Gross Pay - Federal Tax - State Tax - Social Security - Medicare - Pre-Tax Deductions - Post-Tax Deductions = Net Pay.
YTD (Year-to-Date) Columns
Most pay stubs show a YTD column alongside the current-period amounts. This running total lets you track how much you've earned, paid in taxes, and contributed to retirement throughout the year. It's also useful for verifying the Social Security tax cap has been correctly applied once your wages exceed $176,100.
What to Check Every Pay Period
Most payroll errors go undetected because employees don't review their stubs. Spend 60 seconds checking:
- Is gross pay correct? (Matches expected salary or hours × rate)
- Are withholding amounts roughly what you expect?
- Are your benefit deductions the amounts you signed up for?
- Is YTD social security tax showing the correct cap once you hit $176,100?
Use our take-home pay calculator to estimate what your net pay should be. If there's a significant discrepancy, dig into the specific line items on your stub to find what's off.