How to Read a Pay Stub: A Line-by-Line Guide

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The Four Zones of a Pay Stub

Every pay stub, regardless of who generates it, is organized into the same four zones. Once you can find them, the rest is just arithmetic.

Identifying information sits at the top: employee name and address, employer name and address, pay period start and end dates, and the actual pay date. This is the section a landlord or lender checks first, because a stub with a mismatched pay period or a missing employer address is a red flag.

Earnings comes next — gross wages for the period, broken into regular hours, overtime, bonuses, or commissions if applicable. This is the biggest number on the page and the one most people mistake for what they'll actually receive.

Deductions is the middle section, split into taxes withheld and other deductions (retirement contributions, insurance premiums, garnishments). This is where the gap between gross and net pay gets explained, line by line.

Totals appears at the bottom: net pay for the current period, plus a year-to-date (YTD) column that tracks the running total of every line above since January 1. YTD figures are what a mortgage underwriter uses to confirm your income is on pace with your tax return.

Reading the Earnings Line

Gross pay is total compensation before anything is withheld. For an hourly employee, that's hours worked times the hourly rate, plus any overtime at time-and-a-half. For a salaried employee, it's the fixed period amount your annual salary divides into. If a stub shows overtime, it should be broken out as its own line — regular hours at the base rate, overtime hours at the premium rate — not folded into a single number. If you can't see that split, ask for it; it matters if you're ever disputing your pay. For more on the arithmetic behind gross and net figures, see Gross Pay vs. Net Pay Explained.

Reading the Tax Withholding Lines

Federal income tax withholding is not a flat percentage. It's an estimate your employer calculates from the information you gave them on your W-4 — filing status, dependents, and any additional withholding you requested. Two people earning the same salary can have different federal withholding if their W-4s differ. If your withholding looks off, the fix is a new W-4, not a dispute with payroll.

Social Security and Medicare (together called FICA) are more predictable. Social Security withholds 6.2% of FICA wages from your paycheck, matched by another 6.2% from your employer, up to an annual wage base that adjusts each year. Medicare withholds 1.45% of FICA wages with no cap at all, also matched by your employer. If you cross $200,000 in wages for the year, an Additional Medicare Tax of 0.9% kicks in on the excess — withheld from you only, with no employer match. For the full mechanics, see FICA Tax Explained.

State and local withholding, if applicable, follows your state's own rules and is a separate line from federal.

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Reading the Deductions Line

Deductions split into two categories that behave very differently.

Pre-tax deductions — a traditional 401(k) contribution or a Section 125 health insurance premium — come out of your pay before certain taxes are calculated. A traditional 401(k) reduces the wages used for federal income tax withholding. A Section 125 health premium goes further: it reduces the wages used for federal income tax and for Social Security and Medicare. This is exactly why your FICA wages and your federal taxable wages can be two different numbers on the same stub.

Post-tax deductions — a Roth 401(k) contribution, union dues, wage garnishments — come out after taxes are already calculated. They reduce your net pay but not your taxable wages.

A Worked Example

Take a biweekly employee earning $2,400 gross, with a 5% traditional 401(k) contribution ($120) and a $85 Section 125 health premium.

• Federal/state taxable wages: $2,400 − $120 (401k) − $85 (health) = $2,195
• FICA taxable wages: $2,400 − $85 (health only) = $2,315
• Social Security: 6.2% × $2,315 = $143.53
• Medicare: 1.45% × $2,315 = $33.57
• Federal withholding (from this employee's W-4): $200
• State withholding: $80

Total deductions: $120 + $85 + $200 + $80 + $143.53 + $33.57 = $662.10

Net pay: $2,400 − $662.10 = $1,737.90

Notice that Social Security and Medicare were calculated on $2,315, not $2,195 and not $2,400 — that's the pre-tax mechanics in action. This is also why, at year-end, the employee's W-2 Box 1 (federal taxable wages) will be lower than Box 3 and Box 5 (Social Security and Medicare wages), which in turn are usually lower than total gross pay for the year.

What to Do When the Numbers Look Wrong

Check these in order: does gross pay match your hours or salary for the period? Are Social Security and Medicare each roughly 6.2% and 1.45% of your FICA wages? Does the YTD column add up to last period's YTD plus this period's current amount? Most stub errors are typos in hours or a missed deduction change, not conspiracy — but catching them requires knowing what each line is supposed to do. If you create your own pay stubs for a business or as a contractor, see How to Create Pay Stubs for Employees and How to Spot a Fake Pay Stub for what a legitimate stub should always include.

Keep in mind there's no federal law requiring an employer to hand you an itemized stub at all — that requirement, where it exists, comes from state law and varies by state. Employers are required under the Fair Labor Standards Act to keep payroll records for at least three years, so if you ever need historical pay data, it should be available on request even if you didn't keep every stub yourself.

Need a clean, accurate stub for an application or your own records? Build one now with every line calculated correctly.

The Bottom Line

A pay stub isn't a mystery once you know the four zones and the rule that pre-tax deductions change your taxable wages before taxes are calculated. Walk through gross pay, then taxable wages, then FICA, then net — the same order the stub itself follows — and the numbers will make sense every time. For more on tools that automate this math, see Which Calculator Should You Use? or visit the payroll resource hub.

Frequently Asked Questions

Related Guides

• Gross Pay vs. Net Pay Explained
• FICA Tax Explained: Social Security & Medicare Breakdown
• How to Create Pay Stubs for Employees
• How to Spot a Fake Pay Stub

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Authoritative source: IRS — Understanding Your Pay Stub

This guide is informational and not legal or tax advice.