How to Read Your Pay Stub: Every Line Explained
Most Americans receive a pay stub with every paycheck — but surveys consistently show that fewer than half can correctly explain all the deductions on it. If you've ever wondered why your take-home is so much lower than your hourly rate implies, this guide breaks down every single line on a typical US pay stub, with a real worked example for a $55,000/year employee.
What is a Pay Stub?
A pay stub (also called a paycheck stub, earnings statement, or remittance advice) is a document your employer provides with each paycheck that details how your gross pay was calculated and what was deducted to arrive at your net pay. Under federal law, employers are required to keep payroll records, though the specific requirement to provide written pay stubs varies by state — about 26 states require employers to give employees written pay statements.
Pay stubs may be paper or electronic. If your employer uses direct deposit, you may receive only an electronic stub through a payroll portal (ADP, Paychex, Gusto, Workday, etc.).
A Real Pay Stub Example
Let's walk through a sample pay stub for a fictional employee — Sarah — who earns $55,000/year ($26.44/hour), is paid bi-weekly, files as single, and contributes to a 401(k) and health insurance through her employer.
Sarah's gross bi-weekly pay is $2,115.38 — but she takes home only $1,395.51. That's a difference of $719.87 per pay period. Here's exactly where every dollar went.
Section 1: Gross Pay
Gross pay is your total earnings before any deductions. For salaried employees paid bi-weekly, it's simply your annual salary divided by 26 pay periods. For Sarah: $55,000 ÷ 26 = $2,115.38.
Gross pay may include multiple line items if you worked overtime, received a bonus, earned commissions, or received other compensation. Always check that the gross pay matches what you expect — payroll errors happen, and you're entitled to correct pay.
Common gross pay components you might see:
- Regular pay: Your base salary or hourly wages for normal hours
- Overtime pay: Hours over 40/week at 1.5× your regular rate (for non-exempt employees)
- Bonus / commission: Variable pay earned in the period
- Holiday pay / PTO pay: Compensation for paid time off used
- Shift differential: Extra pay for working nights, weekends, or holidays
Section 2: Pre-Tax Deductions
Pre-tax deductions are subtracted from your gross pay before taxes are calculated. This reduces your taxable income — meaning you pay less federal and state income tax. FICA taxes (Social Security and Medicare) are also reduced by most pre-tax deductions.
401(k) Traditional Contributions
Sarah contributes 6% of her gross pay to a traditional 401(k): $2,115.38 × 6% = $126.92 per pay period, or $3,300/year. This amount is deducted before federal income tax and most state income taxes are calculated. The 2026 401(k) contribution limit is $24,500 (plus $7,500 catch-up if you're 50 or older).
Health Insurance Premium
Employer-sponsored health insurance premiums paid by the employee are typically pre-tax under a Section 125 cafeteria plan. Sarah pays $89 per bi-weekly period ($2,314/year) for her share of the premium. Her employer likely pays a larger portion — often 70–80% of the total premium — as an employment benefit not visible on her pay stub.
HSA Contribution
Health Savings Account contributions made through payroll are pre-tax (even avoiding FICA, unlike direct contributions). Sarah contributes $50/period ($1,300/year). The 2026 HSA contribution limit for self-only coverage is $4,400. HSA funds roll over indefinitely and can be invested — making this one of the most tax-efficient savings vehicles available.
Section 3: Tax Withholdings
After pre-tax deductions are subtracted, your employer calculates and withholds taxes based on your W-4 elections and applicable tax tables.
Federal Income Tax
Federal income tax is calculated using IRS Publication 15-T wage bracket tables or percentage method tables, based on your filing status and W-4 allowances. For Sarah (single, standard withholding, $55,000 salary with $6,925/year in pre-tax deductions), federal withholding is approximately $189 per bi-weekly period, or about $4,914/year.
If you receive an unexpectedly large refund or owe a lot at tax time, it usually means your W-4 withholding needs adjustment. See our W-4 withholding guide for exactly how to fill out each step, or our tax refund guide for why refunds have been unusually large in 2026.
Social Security Tax (6.2%)
Social Security tax is 6.2% of gross wages up to the annual wage base of $184,500 in 2026. For Sarah: $2,115.38 × 6.2% = $131.15 per period. Your employer matches this 6.2% separately — it doesn't appear on your stub but is an additional labor cost your employer pays on your behalf.
Once your year-to-date wages cross $184,500, Social Security withholding stops for the rest of the year — you'll notice a larger paycheck around that point.
Medicare Tax (1.45%)
Medicare tax is 1.45% of all gross wages with no cap. For Sarah: $2,115.38 × 1.45% = $30.67 per period. An additional 0.9% Medicare surtax applies to wages over $200,000 (single filers) — this appears as a separate line on pay stubs once the threshold is crossed.
State Income Tax
Sarah works in Georgia, which has a 5.49% flat income tax rate. Her state tax is calculated on taxable wages after pre-tax deductions: approximately $1,857 taxable × 5.49% ÷ 26 = $101.98 per period. State tax withholding varies significantly — workers in Texas, Florida, and seven other states pay $0 in state income tax.
Section 4: Post-Tax Deductions
Post-tax deductions are subtracted after all taxes have been calculated. They don't reduce your taxable income but serve other purposes.
Roth 401(k) Contributions
Unlike traditional 401(k) contributions, Roth 401(k) contributions are made with after-tax dollars. Sarah contributes an additional 1% ($21.15/period) to a Roth 401(k). This money grows tax-free and qualified withdrawals in retirement are completely tax-free — making it valuable for workers who expect to be in a higher tax bracket later.
Other common post-tax deductions you might see:
- Roth IRA contributions (if facilitated through payroll)
- Wage garnishments (court-ordered debt repayment, child support)
- Union dues
- Charitable giving through United Way or employer programs
- After-tax life insurance premiums above IRS limits
- Employee stock purchase plan (ESPP) contributions
Section 5: YTD (Year-to-Date) Totals
Most pay stubs include a YTD column showing cumulative totals since January 1. This is important for:
- Tracking progress toward contribution limits (401k, HSA)
- Verifying Social Security tax stops at the right income level
- Reconciling with your W-2 at year-end (YTD totals on your last pay stub should match your W-2)
- Confirming your employer is remitting taxes correctly
Why Your Take-Home is Lower Than Expected
The most common shock for first-time workers is the gap between gross pay and net pay. For Sarah at $55,000/year, gross bi-weekly is $2,115 but net is only $1,395 — a 34% reduction. Here's the breakdown:
| Gross pay | $2,115.38 |
| Pre-tax deductions (401k + insurance + HSA) | -$265.92 |
| Federal income tax | -$189.00 |
| Social Security (6.2%) | -$131.15 |
| Medicare (1.45%) | -$30.67 |
| Georgia state income tax | -$101.98 |
| Roth 401(k) post-tax | -$21.15 |
| Net Pay | $1,395.51 |
Common Pay Stub Errors to Watch For
Payroll errors affect millions of workers each year. Always review your pay stub and flag discrepancies immediately:
- Wrong hours: Hourly workers should verify hours match their records
- Missed overtime: If you worked over 40 hours, verify the overtime rate (1.5×) was applied
- Wrong tax state: Especially common after relocating or for remote workers
- Benefit deductions not starting/stopping on time: If you enrolled in or dropped a benefit, confirm it takes effect correctly
- 401(k) match not appearing: Your employer match typically appears separately — if it's missing for several periods, contact HR
- Social Security tax continuing past $184,500: This is a payroll error — report it immediately