Salary Negotiation: Before accepting any offer or raise, see our complete Salary Negotiation Guide for scripts, timing strategy, and non-cash alternatives.
Understanding your pay stub is essential for financial awareness. Many workers don’t know what all those line items mean — or whether their paycheck is even correct. This guide explains every section of a pay stub and how to verify you’re being paid properly.
Pay Stub Sections Overview
Every pay stub contains these key sections:
| Section | What It Shows |
|---|---|
| Employee Information | Your name, address, employee ID |
| Pay Period | Dates covered by this paycheck |
| Earnings | Gross pay, regular hours, overtime, bonuses |
| Taxes | Federal, state, local, Social Security, Medicare |
| Before-Tax Deductions | 401(k), HSA, health insurance premiums |
| After-Tax Deductions | Roth 401(k), life insurance, union dues |
| Employer Contributions | 401(k) match, HSA contribution (informational) |
| Totals | Gross pay, total deductions, net pay |
| Year-to-Date (YTD) | Cumulative totals for the year |
Understanding Gross Pay
What is Gross Pay?
Gross pay is your total earnings before any deductions. This is the “headline number” from your job offer.
For salaried employees: Gross pay = Annual salary ÷ Number of pay periods
| Pay Frequency | Pay Periods/Year | $60,000 Salary = |
|---|---|---|
| Weekly | 52 | $1,153.85/check |
| Bi-weekly | 26 | $2,307.69/check |
| Semi-monthly | 24 | $2,500.00/check |
| Monthly | 12 | $5,000.00/check |
For hourly employees: Gross pay = Hours worked × Hourly rate (+ Overtime at 1.5×)
| Component | Calculation | Example |
|---|---|---|
| Regular pay | 40 hrs × $25/hr | $1,000 |
| Overtime pay | 10 hrs × $37.50/hr | $375 |
| Gross pay | $1,375 |
Types of Earnings on Your Stub
| Earning Type | Description |
|---|---|
| Regular | Base hourly or salary pay |
| Overtime | Hours over 40/week at 1.5× rate |
| Double time | Some contracts pay 2× for holidays/Sundays |
| Bonus | Performance, signing, or annual bonuses |
| Commission | Sales-based earnings |
| Holiday pay | Extra pay for working holidays |
| PTO payout | Vacation/sick time cashed out |
| Tips | Reported tip income |
| Shift differential | Extra pay for nights/weekends |
| On-call pay | Compensation for being available |
Tax Withholdings Explained
Federal Income Tax
What it is: Tax withheld for the IRS based on your W-4 form
How it’s calculated: Based on filing status, dependents, and additional withholding you elected
| 2026 Tax Brackets (Single) | Tax Rate |
|---|---|
| $0-$11,925 | 10% |
| $11,926-$48,475 | 12% |
| $48,476-$103,350 | 22% |
| $103,351-$197,300 | 24% |
| $197,301-$250,525 | 32% |
| $250,526-$626,350 | 35% |
| Over $626,350 | 37% |
What to check:
- Does the annual withheld amount roughly match your expected tax?
- Did you recently update your W-4?
- Are you getting huge refunds or owing at tax time?
Social Security Tax (OASDI)
What it is: Funds Social Security retirement and disability benefits
Rate: 6.2% of wages (your employer pays another 6.2%)
Wage limit: $176,100 in 2026 — no tax on earnings above this
| Annual Salary | SS Tax/Year | SS Tax/Paycheck (Bi-weekly) |
|---|---|---|
| $50,000 | $3,100 | $119.23 |
| $75,000 | $4,650 | $178.85 |
| $100,000 | $6,200 | $238.46 |
| $150,000 | $9,300 | $357.69 |
| $176,100+ | $10,918 (max) | Varies until cap |
What to check:
- Is the rate exactly 6.2%?
- Did withholding stop after you hit $176,100?
Medicare Tax
What it is: Funds Medicare health insurance program
Rate: 1.45% of all wages (no limit)
Additional: 0.9% more on wages over $200,000 (single) or $250,000 (married)
| Annual Salary | Medicare Tax/Year | Medicare Tax/Check (Bi-weekly) |
|---|---|---|
| $50,000 | $725 | $27.88 |
| $75,000 | $1,088 | $41.83 |
| $100,000 | $1,450 | $55.77 |
| $225,000 | $3,263 + $225 surtax | $134.15 |
What to check:
- Is the rate exactly 1.45%?
- If over $200K, is the additional 0.9% being withheld?
State Income Tax
What it is: State-level income tax (varies by state)
Rate: 0% to 13.3% depending on state
| State Tax Type | States |
|---|---|
| No income tax | AK, FL, NV, NH*, SD, TN*, TX, WA, WY |
| Flat rate | CO (4.4%), IL (4.95%), IN, KY, MA, MI, NC, PA, UT |
| Progressive | CA (1-13.3%), NY (4-10.9%), and most others |
*NH and TN tax only investment income
What to check:
- Is the rate correct for your state and income level?
- If you work in a different state than you live, are both withholding correctly?
Local Taxes
Some cities and counties have additional taxes:
| Location | Local Tax |
|---|---|
| New York City | 3.078-3.876% |
| Philadelphia | 3.75% (residents) |
| Baltimore | 3.2% |
| Detroit | 2.4% |
| Ohio cities | 1-3% |
What to check:
- If you work or live in a city with local tax, is it being withheld?
Before-Tax (Pre-Tax) Deductions
These deductions come out before taxes are calculated, reducing your taxable income.
401(k) / 403(b) Contributions
What it is: Retirement savings through your employer
2026 limit: $23,500 (plus $7,500 catch-up if 50+)
| Contribution Rate | On $75,000 Salary | Per Paycheck (Bi-weekly) | Tax Savings (22% bracket) |
|---|---|---|---|
| 3% | $2,250/year | $86.54 | $495/year |
| 6% | $4,500/year | $173.08 | $990/year |
| 10% | $7,500/year | $288.46 | $1,650/year |
| 15% | $11,250/year | $432.69 | $2,475/year |
What to check:
- Is your elected percentage being deducted?
- Are you getting your full employer match?
Health Insurance Premiums
What it is: Your share of health insurance cost
Average employee cost: $100-$600/month (varies by plan and employer contribution)
| Coverage Type | Typical Employee Cost (Monthly) |
|---|---|
| Employee only | $100-$200 |
| Employee + spouse | $250-$400 |
| Employee + children | $200-$350 |
| Family | $400-$700 |
What to check:
- Does the amount match your enrollment selection?
- Did it change after open enrollment?
Health Savings Account (HSA)
What it is: Tax-advantaged account for medical expenses (with high-deductible plan)
2026 limits: $4,300 (individual) / $8,550 (family)
What to check:
- Is your elected contribution being deducted?
- Are you getting any employer HSA contribution?
Flexible Spending Account (FSA)
What it is: Pre-tax account for medical or dependent care expenses
2026 limits: $3,200 (healthcare FSA) / $5,000 (dependent care FSA)
What to check:
- Is your annual election divided correctly across pay periods?
- Remember: “Use it or lose it” (mostly)
Commuter Benefits
What it is: Pre-tax deduction for transit or parking
2026 limit: $325/month transit, $325/month parking
What to check:
- Is the monthly amount correct for your usage?
After-Tax Deductions
These come out after taxes are calculated — no tax savings.
Roth 401(k) Contributions
What it is: After-tax retirement contributions (tax-free withdrawals later)
Limit: Combines with traditional 401(k) for $23,500 total
What to check:
- Is this what you elected?
- Roth reduces net pay more than traditional (same contribution, but taxed first)
Life Insurance (if employer-paid exceeds $50K)
What it is: Imputed income for life insurance over $50,000
Why it’s taxed: IRS considers employer-paid coverage over $50K as taxable income
What to check:
- If you have significant employer life insurance, is the imputed income correct?
Disability Insurance (employee-paid)
What it is: Your contribution to disability coverage
Union Dues
What it is: Required payments if in a union
Wage Garnishments
What it is: Court-ordered deductions for child support, debt, or tax liens
Note: These are involuntary and legally required
Other Voluntary Deductions
- Additional life insurance
- Voluntary accident/disability insurance
- Legal plans
- Pet insurance
- Charitable giving
- Employee stock purchase plan (ESPP)
Reading the Totals Section
Key Numbers
| Term | Meaning |
|---|---|
| Gross Pay | Total earnings before deductions |
| Total Deductions | All taxes + before-tax + after-tax deductions |
| Net Pay | What you actually receive (deposited or check) |
Formula: Net Pay = Gross Pay − Total Deductions
Example Pay Stub Totals
Employee: $75,000/year salary, bi-weekly pay, single, 6% 401(k), employee-only health insurance
| Line Item | This Period | YTD |
|---|---|---|
| Gross Pay | $2,884.62 | $37,500 |
| Federal Tax | $325.00 | $4,225 |
| Social Security | $178.85 | $2,325 |
| Medicare | $41.83 | $544 |
| State Tax (5%) | $130.96 | $1,702 |
| 401(k) | $173.08 | $2,250 |
| Health Insurance | $125.00 | $1,625 |
| Total Deductions | $974.72 | $12,671 |
| Net Pay | $1,909.90 | $24,829 |
Effective deduction rate: 33.8% of gross pay
Year-to-Date (YTD) Section
What YTD Shows
| YTD Item | Why It Matters |
|---|---|
| YTD Gross | Verify annual salary is tracking correctly |
| YTD Federal Tax | Compare to expected annual tax liability |
| YTD Social Security | Confirm it stops at $176,100 wage base |
| YTD 401(k) | Track progress toward annual limit |
| YTD Vacation/Sick Used | Track PTO balance |
Using YTD for Tax Planning
At mid-year, check:
- Is YTD federal tax on track for your expected annual tax?
- If significantly over/under, adjust W-4
At year-end, verify:
- YTD earnings match what employer reports on W-2
- All deductions are accurate
How to Verify Your Pay Stub is Correct
Step-by-Step Verification
1. Verify Gross Pay
| Pay Type | Verification |
|---|---|
| Salary | Annual salary ÷ pay periods = gross |
| Hourly | Hours × rate + overtime = gross |
2. Verify Tax Rates
| Tax | Expected | How to Check |
|---|---|---|
| Social Security | 6.2% | Gross × 0.062 = SS tax |
| Medicare | 1.45% | Gross × 0.0145 = Medicare tax |
| Federal | Varies | Compare to IRS withholding tables |
| State | Varies | Compare to state tax tables |
3. Verify Benefits
- 401(k): Gross × your elected % = contribution
- Health insurance: Should match enrollment form
- HSA/FSA: Annual election ÷ pay periods
4. Check Math
Gross Pay − All Deductions = Net Pay
Common Pay Stub Errors
| Error | How to Spot | What to Do |
|---|---|---|
| Wrong tax withholding | Compare to IRS tables | Update W-4, notify HR/payroll |
| Missing overtime | Check hours reported | Provide timesheet, escalate |
| Benefits wrong | Doesn’t match enrollment | Contact HR/benefits |
| 401(k) % wrong | Calculate expected amount | Contact 401(k) provider or HR |
| Missing bonus | Expected bonus not shown | Contact manager/HR |
| Name/address wrong | Check personal info | Update in HR system |
When to Contact HR/Payroll
Contact payroll if:
- Net pay is unexpectedly different
- Tax withholding seems wrong
- Benefits deductions don’t match elections
- You’re being double-taxed (e.g., two states)
- YTD doesn’t add up
- Missing expected earnings (overtime, bonus)
Special Situations
Multiple Jobs
If you have multiple jobs:
- Each employer withholds taxes separately
- You may be under-withheld (each assumes it’s your only job)
- Use IRS withholding calculator or submit new W-4s
Bonus Pay Stubs
Bonuses are often taxed differently:
- Flat rate method: 22% federal on bonuses under $1M
- Aggregate method: Added to regular pay, taxed at combined rate
Result: Bonus checks often show higher withholding, but you get the difference back at tax time (or owe less).
Commission Pay
- May be on separate stub or combined
- Taxed as ordinary income
- May be paid on different schedule than salary
Final Paycheck
When leaving a job:
- Should include unused PTO payout (if company policy allows)
- May trigger different tax treatment
- Verify all YTD amounts before you leave
Reading Your Pay Stub: Quick Reference
Must-Know Formulas
| Calculation | Formula |
|---|---|
| Bi-weekly gross (salary) | Annual salary ÷ 26 |
| Hourly overtime rate | Regular rate × 1.5 |
| Social Security tax | Gross × 6.2% (up to $176,100) |
| Medicare tax | Gross × 1.45% |
| Net pay | Gross − all deductions |
| Effective tax rate | Total taxes ÷ gross pay |
Key Numbers to Memorize (2026)
| Item | Amount |
|---|---|
| Social Security rate | 6.2% |
| Social Security wage base | $176,100 |
| Medicare rate | 1.45% |
| Medicare surtax threshold | $200,000 (single) |
| 401(k) limit | $23,500 |
| 401(k) catch-up (50+) | $7,500 |
| HSA limit (individual) | $4,300 |
| HSA limit (family) | $8,550 |
Bottom Line
Every pay period, verify:
- ✅ Gross pay matches your salary/hours
- ✅ Tax withholdings are reasonable
- ✅ Benefits deductions match your elections
- ✅ Net pay calculation is correct
- ✅ YTD totals are accumulating properly
Keep your pay stubs (or access to them) for at least 1 year — you’ll need them to verify your W-2 and for any discrepancy resolution.
Understanding your pay stub puts you in control of your finances. If something looks wrong, ask — payroll errors happen, and catching them early saves headaches at tax time.
Sources
- Internal Revenue Service. “Tax Information for Individuals.” irs.gov
- Social Security Administration. “Benefits and Eligibility Information.” ssa.gov/benefits
- Centers for Medicare & Medicaid Services. “Medicare Program Information.” medicare.gov
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy