How to Read a Pay Stub, Line by Line
From gross to take home pay, and a three line check that catches mistakes.
This article is educational information only, not personalized financial advice. Nusafa and its authors are not licensed financial advisors, and nothing here should be read as a recommendation to buy, sell, or hold any specific investment. Read our full disclosure policy.
Most people look at one number on their pay stub: the amount that landed in the bank. The rest is where mistakes, missed benefits and surprise tax bills hide. Five minutes of reading now saves you a lot of guessing later.
Key takeaways
- Gross pay is what you earned. Net pay is what you take home. Everything in between is a tax or a deduction.
- Social Security and Medicare take a fixed share of your pay, and your employer pays a matching amount.
- Check three things every pay period: hours or salary, tax withholding, and every deduction name.
The sections, from top to bottom
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Earnings. Hours, rate, overtime and any bonus. Gross pay is the total before anything is taken out. If you are paid hourly, check the hours against your own record.
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Pre tax deductions. Money taken out before income tax is figured, such as 401(k) contributions and health insurance premiums. Because they come out first, they lower the income your tax is based on.
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Taxes. Here you will see federal income tax, usually state income tax, and FICA. FICA is Social Security and Medicare. Your share is 6.2% and 1.45% of your pay, and your employer pays a matching amount. Social Security stops once you reach a yearly wage limit.
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Post tax deductions. Items taken out after tax, such as Roth retirement contributions, union dues or wage garnishments.
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Net pay. Gross pay minus taxes and deductions. This is your take home pay.
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Year to date (YTD). Running totals for the year. Use them to see how much you have earned, paid in tax, and put into retirement so far.
A worked example
The numbers below are made up to show the shape of a stub, not what you will earn or owe.
| Line | Amount | |---|---| | Gross pay | $2,000 | | Social Security (6.2%) | -$124 | | Medicare (1.45%) | -$29 | | Federal income tax | -$200 | | 401(k) contribution | -$100 | | Health insurance | -$60 | | Net pay | $1,487 |
Add up the deductions ($513) and subtract from $2,000. If your stub does not add up like this, ask payroll.
The three line check
- Is the pay right? Check hours, rate and overtime against your own record.
- Is the tax withholding right? It is based on your Form W-4. If you changed jobs, married or had a child, it may be out of date. The IRS has a free tool for checking your withholding.
- Do you recognise every deduction? Look up any code you do not know. A wrong benefit election is one of the most common errors.
Common things to question
- A bigger tax bite than last month. A bonus is often taxed at a higher withholding rate, even though it evens out when you file.
- A 401(k) amount that looks off. Check it matches what you chose. Our guide to reading 401(k) fees explains what else to look at.
- Health benefits you do not use. Review them at open enrollment.
- No tax withheld on side income. See estimated taxes on side income.
Your checklist for this week
- ☐ Find your latest pay stub and circle gross, net and total deductions.
- ☐ Check hours or salary against your own record.
- ☐ Look up any deduction code you do not recognise.
- ☐ Check your W-4 and your withholding with the IRS tool.
- ☐ Keep one stub per quarter in a safe place.
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This is general education, not personalized financial advice or tax advice. Rates and rules change, so check IRS.gov or a tax professional for your situation.
