Updated: May 09, 2025

Getting a paycheck is one of the most rewarding parts of working, but understanding what’s actually on that paycheck can be confusing. Learning how to read your pay stub helps you manage your money more effectively and ensures you’re being paid correctly.

What’s on Your Paycheck Stub

Your paycheck stub, also known as a pay slip or earnings statement, contains important information about your wages, taxes, and deductions. While the exact format may vary depending on your employer or payroll provider, most pay stubs include several common sections.

The gross pay is the total amount you earned before any deductions. This includes your regular hourly or salary earnings, plus any overtime, bonuses, or other types of income. If you work hourly, this part of your pay stub will likely show the number of hours worked and your hourly rate. For salaried workers, it typically shows a fixed amount based on your annual salary divided by pay periods.

Next is the net pay, also known as take-home pay. This is the amount you actually receive after all taxes and deductions have been taken out. It’s the number you’ll see deposited into your bank account or printed on a paycheck.

In between gross and net pay, you’ll find deductions. These fall into two main categories: taxes and voluntary contributions. Each deduction serves a specific purpose, and knowing what they are helps you understand where your money is going.

Understanding Tax Withholdings

Taxes are one of the biggest deductions from any paycheck. These include federal, state, and sometimes local taxes. Your employer is required to withhold these taxes from your paycheck and send them to the government on your behalf.

The amount withheld for federal income tax depends on your earnings and the information you provided on your W-4 form when you started your job. This form tells your employer how much to withhold based on your filing status, dependents, and other adjustments. If too much is withheld, you may get a refund at tax time. If too little is withheld, you might owe money. You can learn more about adjusting your withholdings at irs.gov.

Most employees also have FICA taxes withheld, which include Social Security and Medicare. Social Security is withheld at a rate of 6.2 percent, and Medicare at 1.45 percent, for a total of 7.65 percent. Your employer matches these amounts, so the full contribution is 15.3 percent of your wages. These taxes fund programs that provide retirement and health benefits later in life.

If you live in a state that has income tax, you’ll see an additional deduction labeled state withholding or similar. Each state sets its own tax rate and rules. Some states, like Florida and Texas, don’t have income taxes at all. Others, like California and New York, have higher rates. If your city or county also collects income tax, that will appear on your pay stub as well.

Other Mandatory Deductions

In addition to taxes, your paycheck may include other required deductions. These could include court-ordered payments like child support or wage garnishments if you owe money from a lawsuit or unpaid debt. Your employer is legally required to withhold these amounts and send them to the appropriate agency or creditor.

You may also see contributions to unemployment insurance or state disability insurance. These vary by state and employer and are usually small percentages deducted from each paycheck.

Voluntary Deductions

Not all deductions are mandatory. Many employees choose to have money taken out of their paychecks for benefits or savings plans. These are called voluntary deductions, and they allow you to pay for certain expenses before your wages are taxed.

Health insurance premiums are one of the most common voluntary deductions. If you have medical, dental, or vision coverage through your job, your share of the premium is often taken out of your paycheck each pay period. This reduces your taxable income and spreads the cost over time.

Other benefits may include contributions to retirement savings accounts like a 401(k) or 403(b), life insurance premiums, or flexible spending accounts for healthcare or dependent care expenses. Some employers also offer commuter benefits or gym memberships that can be paid for through payroll deductions.

Keep in mind that some voluntary deductions are pre-tax, meaning they reduce your taxable income, while others are post-tax. Pre-tax deductions save you money in the short term by lowering your tax bill, but they may also affect how much Social Security or unemployment benefits you qualify for later.

Year-to-Date Totals and Why They Matter

Most pay stubs include a year-to-date, or YTD, column. This shows the total amount you’ve earned and the total deductions taken so far during the current calendar year. Keeping an eye on these numbers helps you track your income and plan for tax season.

For example, your YTD earnings can help you estimate whether you’re on track to meet income goals or qualify for income-based assistance programs. Your YTD tax withholdings can give you a rough idea of whether you’ll owe taxes or receive a refund in April.

YTD totals are also helpful if you’re applying for a loan, renting an apartment, or need to verify income for any reason. Having your most recent pay stub on hand with accurate YTD information can simplify those processes.

Common Pay Schedule Terms

Understanding how often you get paid helps you manage your budget. Most employers pay on a weekly, biweekly, semimonthly, or monthly schedule.

Weekly means you receive a paycheck every week, usually 52 times a year. Biweekly means every two weeks, for a total of 26 paychecks annually. Semimonthly pay is twice a month, typically on the 1st and 15th, which equals 24 paychecks a year. Monthly pay is once a month, or 12 paychecks annually.

Your pay schedule affects how you plan your spending and how much each paycheck will be. If you’re paid biweekly, for example, some months will have three pay periods instead of two, giving you a chance to catch up or get ahead on expenses.

Mistakes to Watch For

Pay stubs are usually accurate, but mistakes can happen. It’s a good idea to review your pay stub every time you’re paid, especially if your hours vary or if you’ve recently updated your benefits.

Make sure your hours worked match what you expected, your deductions look correct, and your net pay is what you anticipated. If something seems off, contact your HR or payroll department as soon as possible. Fixing mistakes early can prevent problems down the line.

Also, if your paychecks are consistently short or you’re not receiving a pay stub at all, that could be a red flag. Employers are required to follow wage laws, and you have the right to request clear documentation of your earnings and deductions. If you suspect wage theft or other issues, you can reach out to your state labor department or visit dol.gov for more information.

Final Thoughts

Understanding your paycheck is an important part of managing your finances. When you know what each line means, you can take better control of your money, spot errors quickly, and make informed decisions about your taxes and benefits. Whether you’re new to the workforce or just never looked closely at your pay stub before, taking the time to learn this information can lead to better financial habits and peace of mind.