Your pay stub contains crucial financial information, but many employees struggle to decode the various numbers, abbreviations, and deductions. Understanding each component helps you manage your finances better and catch potential errors.
Gross pay represents your total earnings before any deductions. For hourly employees, this includes regular hours, overtime (typically 1.5x your hourly rate), and any bonuses or commissions. Salaried employees see their period salary amount, plus any additional compensation.
Federal Income Tax: Withheld based on your W-4 form and current tax brackets. This amount varies with your filing status and allowances.
Social Security Tax: Fixed at 6.2% of your gross pay (up to the annual wage base limit).
Medicare Tax: Set at 1.45% of all earnings, with an additional 0.9% for high earners.
Depending on your location, you may see state income tax, local taxes, or state disability insurance (SDI) deductions. Rates vary significantly by state—some states have no income tax at all.
Health Insurance: Your portion of medical, dental, or vision premiums.
Retirement Contributions: 401(k), 403(b), or other retirement plan contributions.
Life Insurance: Premiums for employer-sponsored life insurance policies.
Other Benefits: FSA contributions, parking fees, or union dues.
The YTD section shows cumulative amounts from January 1st through your current pay period. These figures are essential for tax preparation and tracking your annual earnings progress.
After all deductions, net pay is what actually hits your bank account. This amount should match your direct deposit or check.
Review each pay stub for calculation errors, missing overtime, or incorrect deduction amounts. Contact HR immediately if you notice discrepancies—early detection prevents bigger problems later.
Understanding your pay stub empowers you to make informed financial decisions and ensures you're being paid correctly.
Generate professional paystubs instantly with accurate tax calculations
Create Paystub Now