Payroll Glossary: A-Z Reference of Pay Stub & Payroll Terms

Prefer to see these terms applied to a real document? Build a pay stub and watch each line item populate as you go.

This page is a reference, not a narrative — a single place to look up any term you run into on a pay stub, a W-4, or an HR onboarding packet. Entries are short by design. Where a term has enough depth to earn a full explanation with worked examples, the entry links out to that dedicated guide instead of repeating it here. If you're looking for a walkthrough of the terms you meet in the order you actually encounter them on your first payslip, our companion piece on payroll terms in sequence covers that ground instead.

A

Additional Medicare Tax — A 0.9% surtax withheld on wages above $200,000 from a single employer, on top of the standard 1.45% Medicare rate. It's withheld from the employee only; employers don't match it. See the full Medicare tax breakdown for worked examples.

B

Base Pay — Fixed compensation before overtime, bonuses, or commission, expressed as an annual salary or an hourly rate. It's the starting figure gross pay is built from each period.

Bonus Pay — Supplemental compensation outside regular wages, often taxed using a flat supplemental withholding rate rather than the employee's standard withholding rate, which is why a bonus check sometimes has a higher percentage withheld than a regular paycheck.

D

Deduction — Any amount subtracted from gross pay, whether mandatory (taxes) or elected (retirement contributions, insurance premiums). Deductions split into pre-tax (reduce taxable wages) and post-tax (don't).

Direct Deposit — Electronic transfer of net pay from an employer's bank to an employee's bank via the ACH network, replacing paper checks. See the full direct deposit guide for how the timing actually works.

E

Exempt Employee — A worker classified as not eligible for overtime pay under the Fair Labor Standards Act, typically salaried employees in executive, administrative, or professional roles meeting specific duties and salary tests.

F

FICA — The Federal Insurance Contributions Act, the payroll tax funding Social Security and Medicare, split between employee and employer. See our full FICA breakdown for the complete rate structure.

Filing Status — The category (Single, Married Filing Jointly, Head of Household, etc.) an employee selects on Form W-4 that determines federal income tax withholding calculations.

G

Garnishment — A court-ordered or agency-ordered deduction taken directly from wages to satisfy a debt, such as child support, unpaid taxes, or a creditor judgment. Garnishments are post-tax and employers are legally required to comply.

Gross Pay — Total earnings before any deductions: base pay plus overtime, bonuses, and commissions. See gross pay versus net pay explained for a full side-by-side comparison.

N

Net Pay — What's left after every deduction is subtracted from gross pay; the amount that actually lands in a bank account. See the full net pay breakdown for a worked example.

Non-Exempt Employee — A worker entitled to overtime pay (typically 1.5x the regular rate) for hours worked beyond 40 in a workweek, as required under federal law.

O

Overtime Pay — Additional wages paid at a premium rate, usually 1.5 times the regular hourly rate, for hours worked beyond the standard threshold. Starting with tax years 2026 and later, employers must separately report qualified overtime compensation on the W-2 under code TT in Box 12.

P

Pay Period — The recurring span of time an employee's wages cover, commonly weekly, biweekly, semimonthly, or monthly. Pay period length determines how gross pay is calculated from an annual salary.

Pay Stub — The itemized document accompanying (or replacing) a paycheck, showing gross pay, every deduction, and net pay for the period, plus year-to-date totals.

Proof of Income — Documentation, often a pay stub or a formal letter, used to verify earnings for a landlord, lender, or government agency. See our proof of income letter guide for when a letter is needed instead of a stub.

S

Social Security Wage Base — The annual earnings cap above which the 6.2% Social Security tax stops applying for the remainder of the year. The wage base adjusts each year, so it's worth checking the current figure rather than assuming last year's number still applies.

State Income Tax — Tax withheld on behalf of a state government, calculated separately from federal withholding. Some states have no income tax at all, which is why two employees with identical gross pay can see different net pay depending on where they live.

T

Tips (Reported) — Cash and charged tips reported to an employer for tax withholding purposes. For tax years 2026 and later, qualified tips are separately reported on the W-2 under code TP in Box 12, and Box 14 splits into 14a and 14b, with 14b carrying the employee's Treasury Tipped Occupation Code.

W

W-2 — The annual wage and tax statement employers issue summarizing a full year's gross pay, withholding, and deductions. See W-2 versus pay stub for how the two documents differ.

W-4 — The Employee's Withholding Certificate submitted when starting a job, telling an employer how much federal income tax to withhold. See how to fill out a W-4 for a step-by-step walkthrough.

W-9 — The form independent contractors submit to a paying business, providing a taxpayer ID number instead of authorizing withholding. See W-9 versus W-4 for how the two forms serve different purposes.

Withholding — The portion of wages an employer holds back and remits directly to a tax authority on an employee's behalf, covering federal income tax, state income tax, and FICA.

Want to check your own withholding math against a real document? Generate a pay stub and compare every line to the definitions above.

Y

Year-To-Date (YTD) — The cumulative total of a specific figure (gross pay, a given deduction, net pay) from the start of the calendar year through the current pay period. YTD totals are what payroll systems use to determine when caps like the Social Security wage base or the Additional Medicare Tax threshold have been crossed.

How to Use This Glossary

Treat this page as a lookup tool rather than something to read start to finish. If you're trying to understand your very first pay stub in order — from the moment you see your offer letter through the moment your first direct deposit lands — our narrative walkthrough of first-payslip terms covers the same ground in the sequence you'll actually encounter it, rather than alphabetically. And if you're a 1099 contractor rather than a W-2 employee, several of these terms work differently; our self-employed pay stub guide covers the contractor-specific version of gross pay, deductions, and documentation.

The Bottom Line

Payroll terminology looks intimidating mostly because it's unfamiliar, not because it's actually complicated. Every term on this page reduces to one of three categories: what you earned, what got subtracted, and what's left. The linked entries above go deeper on the terms most likely to cause confusion or produce an error on your stub — Medicare tax, net pay, and direct deposit chief among them.

Ready to put these terms into practice? Create a professional pay stub with every line item labeled clearly and calculated correctly.

Frequently Asked Questions

Related Guides

• Payroll Terms Explained: Your First Payslip in Order
• Glossary: Medicare Tax
• Glossary: Net Pay
• Glossary: Direct Deposit

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Authoritative source: IRS — Topic 751: Social Security & Medicare Withholding Rates

This guide is informational and not legal or tax advice.