How to Read Your Pay Stub: Every Line Explained (2026)

The Example Pay Stub We'll Use

Let's walk through a realistic pay stub for a salaried employee. Our example: Jordan Chen, $65,000 annual salary, bi-weekly pay schedule (26 pay periods per year), single filing status, standard W-4, contributing 6% to a traditional 401(k), enrolled in employer-sponsored health insurance, and contributing to a healthcare FSA.

Gross Pay: Your Starting Number

Gross pay is your total earnings before any deductions. For a salaried employee, it's simply the annual salary divided by the number of pay periods: $65,000 ÷ 26 = $2,500.00 per bi-weekly paycheck.

For hourly employees, gross pay equals regular hours × rate plus any overtime (1.5x for hours over 40 per week under the FLSA). Gross pay also includes taxable bonuses, commissions, and tips reported to the employer.

Gross pay is also called your "taxable wages before deductions" on some stubs. It is the ceiling from which everything else is subtracted.

Pre-Tax Deductions: What Reduces Your Taxable Income

Pre-tax deductions are subtracted before federal income tax (and usually state income tax) is calculated. They reduce your taxable wage base, lowering the amount of income tax withheld. Every dollar of pre-tax deductions saves you money at your marginal tax rate.

Common Pre-Tax Deductions

Deduction	2026 Limit	Reduces Federal Tax?	Reduces FICA?
Traditional 401(k) / 403(b)	$23,500 ($31,000 age 50+)	Yes	No
Health insurance (Section 125)	No dollar limit	Yes	Yes
Dental / Vision insurance	No dollar limit	Yes	Yes
Health Savings Account (HSA)	$4,300 (self) / $8,550 (family)	Yes	Yes (payroll)
Healthcare FSA	$3,300	Yes	Yes
Dependent care FSA	$5,000 per household	Yes	Yes
Commuter / Parking benefits	$325/mo each	Yes	Yes

In our example: Jordan's pre-tax deductions total $295 per paycheck ($150 + $95 + $50). This reduces the federal income tax base from $2,500 to $2,205. Over 26 pay periods, this saves approximately $671 in federal income tax for a single filer in the 12% bracket.

Federal Income Tax Withholding

Federal income tax withholding is calculated using your W-4 elections and the IRS Publication 15-T percentage method tables. For a single filer using the standard deduction approach on their W-4, the calculation works like this:

1. Start with your gross wages minus pre-tax deductions: $2,500 − $295 = $2,205 (adjusted wages)
2. Subtract the per-period standard deduction allowance (for single): $15,000 ÷ 26 = $576.92 per paycheck
3. Annualize the result: ($2,205 − $576.92) × 26 = $42,333 annualized taxable income
4. Calculate annual tax using 2026 brackets: 10% on $12,250 = $1,225; 12% on $30,083 = $3,610; total = $4,835
5. Divide back to per-period: $4,835 ÷ 26 = $185.96 (approximately $186)

Our example shows $223, which is slightly higher — that's consistent with a slightly different W-4 election or a rounding difference in the employer's payroll software. Your actual withholding may differ by a few dollars from manual calculations due to software-specific rounding methods.

FICA: Social Security and Medicare

FICA taxes are calculated as a flat percentage of FICA wages — the gross pay minus Section 125 premiums (health, dental, vision, FSA). In Jordan's case, FICA wages = $2,500 − $95 (health) − $50 (FSA) = $2,355.

• Social Security: $2,355 × 6.2% = $146.01 (our stub shows $143.62 — this is a minor rounding difference; your employer may use a slightly different methodology)
• Medicare: $2,355 × 1.45% = $34.15

The Social Security tax stops once cumulative wages hit the 2026 wage base of $176,100. For Jordan, with an annual salary of $65,000, Social Security withholding continues all year. Medicare has no wage base — it applies to every dollar throughout the year and beyond.

Your employer matches your Social Security and Medicare taxes dollar-for-dollar — but this employer share never appears on your pay stub because it comes from the employer's own funds, not your paycheck.

State Income Tax and Other Deductions

State income tax appears on most pay stubs as a separate line. The example stub shows a $110.75 state withholding based on a hypothetical 5% flat rate. Your actual state withholding depends on:

• Your state's tax rate and bracket structure (flat rate vs. progressive)
• Your state withholding form elections (the state equivalent of the W-4)
• Whether your state follows federal taxable income or has its own rules

Nine states have no state income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you live and work in one of these states, the state tax line on your stub will show zero or may not appear at all.

Post-Tax Deductions

Post-tax deductions are subtracted from net pay after all taxes are calculated. They do not reduce your tax burden. Common post-tax deductions include:

• Roth 401(k) contributions — same dollar limit as traditional 401(k) but no tax reduction today
• Life insurance premiums for coverage over $50,000 (imputed income)
• Wage garnishments — court-ordered deductions for child support, student loans, or tax levies
• Union dues
• Charitable donations through employer giving programs
• Disability insurance for employee-paid supplemental plans

Net Pay: What You Actually Take Home

Net pay is simply gross pay minus all deductions — pre-tax, taxes, and post-tax. In Jordan's example:

$2,500.00 gross
− $150.00 (401k)  − $95.00 (health)  − $50.00 (FSA)
− $223.00 (federal)  − $143.62 (SS)  − $33.60 (Medicare)  − $110.75 (state)
= $1,694.03 net pay

The stub shows $1,744.03 — that's $50 more. The difference comes from the FSA being post-tax in this particular stub design, or from rounding in the tax calculations. The point is: trace through every line to verify it adds up correctly.

Understanding Year-to-Date (YTD) Figures

The YTD column shows cumulative totals from January 1 through the current pay period. These figures have several practical uses:

• Verify W-2 accuracy: At year-end, your W-2 Box 1 (federal wages) and Box 4 (Social Security withheld) should match your final-period YTD figures. Any discrepancy warrants a call to HR.
• Track 401(k) progress: Compare your YTD 401(k) contribution to the $23,500 annual limit. If you're on track to hit the limit in November, your contributions will automatically stop and your net pay will increase for the remaining pay periods.
• Monitor the SS wage base: Once your YTD Social Security wages exceed $176,100, Social Security withholding stops. Higher earners often notice a pay increase in the second half of the year because of this.
• Spot discrepancies early: If your YTD figures look off mid-year (e.g., much higher or lower than expected based on pay periods elapsed), investigate before year-end when corrections become more complex.

Is Your Withholding Correct? How to Check

Incorrect withholding leads to a surprise tax bill in April (underwithholding) or an unnecessary interest-free loan to the IRS all year (overwithholding). Here's how to verify:

1. Project your annual withholding: Multiply current-period federal withholding by 26 (bi-weekly) or 12 (monthly). YTD ÷ pay periods elapsed also works.
2. Estimate your annual federal tax: Use the 2026 brackets and your expected taxable income (gross wages minus pre-tax deductions minus the standard deduction).
3. Compare: If projected withholding is within $500 of your estimated tax, you're in good shape. A large gap means updating your W-4 using the IRS Tax Withholding Estimator.
4. Adjust on your W-4: You can increase withholding on Line 4(c) (additional withholding per period) or claim deductions on Line 4(b) to reduce withholding. Changes take effect in the first paycheck after your employer processes the form.

What to Do If Your Pay Stub Has an Error

Pay stub errors are more common than most people expect — especially after benefits enrollment changes, mid-year raises, or new hires being set up in the payroll system. Here's how to handle them:

1. Document the discrepancy. Pull the most recent correct stub and the incorrect one. Write down the specific line, the expected amount, and the actual amount.
2. Contact HR or payroll in writing. Email is better than verbal communication — it creates a paper trail. Be specific: "My federal income tax withholding should be approximately $223/paycheck based on my W-4 and salary, but I'm being withheld $423."
3. For underpaid wages: Under the FLSA, employers must correct wage shortfalls promptly. Most states add additional requirements and penalties for late wage payment.
4. For overwithholding of taxes: Tax overwithheld from prior periods doesn't come directly back from your employer — you recoup the difference as a refund when you file your annual return. Your employer can adjust current withholding going forward.
5. Escalate if unresolved. If your employer doesn't fix a pay error within one or two pay periods, you can file a complaint with the Department of Labor's Wage and Hour Division (dol.gov/agencies/whd) or your state's equivalent agency.

Frequently Asked Questions

What does YTD mean on a pay stub?

YTD stands for Year-to-Date. It shows the running total for each earnings or deduction line from January 1 through the current pay date. Use the final YTD figures to verify your W-2 at year-end — the federal wages on your W-2 Box 1 should closely match your final YTD taxable wage figure on your last pay stub of the year.

Why is my Social Security tax different from a coworker who earns the same salary?

The most common reason is that one employee has crossed the 2026 Social Security wage base ($176,100) and withholding stopped for the rest of the year. Other reasons include different Section 125 health premium elections (which reduce the SS wage base), mid-year start dates, or a payroll correction. If neither explanation fits, it may be a payroll error worth investigating.

What are pre-tax deductions and how do they affect my paycheck?

Pre-tax deductions reduce your taxable income before federal and state withholding is calculated. A $150 pre-tax 401(k) contribution doesn't cost $150 in take-home pay — it costs $150 minus the tax you would have paid on that $150. For a 22% federal bracket, the real after-tax cost is only about $117. Section 125 health premiums additionally reduce your FICA wages, saving you another 7.65%.

How do I know if my employer withheld the correct federal income tax?

Multiply your per-paycheck federal withholding by 26 (bi-weekly) or 12 (monthly) to project your full-year withholding. Compare that to your estimated annual federal tax using the 2026 brackets and your expected gross income minus pre-tax deductions and the $15,000 standard deduction. If the numbers are more than $500 apart, update your W-4 — or use our take-home pay calculator to verify instantly.

My pay stub shows incorrect deductions — what should I do?

Document the discrepancy with specific dollar amounts, then contact HR or payroll in writing. For underpaid wages, your employer must correct the shortfall promptly. For over-withheld taxes, you'll typically recoup excess amounts when you file your annual return. If the issue isn't resolved within two pay periods, you can escalate to the Department of Labor's Wage and Hour Division or your state's labor commissioner.