How to read a pay stub (and catch costly mistakes)
Your pay stub shows exactly how gross pay becomes take-home pay. Learn what each line means and what to double-check.
Key takeaways
- Gross pay is what you earn before anything is taken out; net pay is what lands in your account.
- Deductions fall into three groups: taxes, pre-tax benefits and after-tax deductions.
- Check your hours, pay rate, tax withholding and benefit deductions whenever your pay or job changes.
Gross pay vs. net pay
Gross pay is your total earnings for the pay period: salary or hourly wages plus any overtime, bonuses or commissions. Net pay, or take-home pay, is what remains after all deductions. Build your budget on net pay, because that’s the money you can actually spend.
Taxes withheld
Most U.S. pay stubs list federal income tax withholding, state and local income taxes where they apply, and FICA taxes for Social Security and Medicare. For employees, the FICA rates are 6.2% for Social Security, up to an annual wage limit, and 1.45% for Medicare.
Income tax withholding depends on the information on your W-4 form. Withhold too little and you may owe at tax time; withhold too much and you’re giving the government an interest-free loan.
Pre-tax and after-tax deductions
Year-to-date (YTD) columns add up each line since January 1, which makes it easy to track your total retirement contributions and taxes paid.
- Pre-tax: traditional 401(k) contributions, health, dental and vision premiums, and health savings account (HSA) contributions. These lower your taxable income.
- After-tax: Roth 401(k) contributions, some insurance policies, union dues and wage garnishments.
Mistakes worth catching
If something looks off, raise it with your payroll or HR team quickly — errors are easier to fix within the same pay period or tax year.
- Wrong hours or pay rate, especially after a raise or schedule change.
- Missing overtime or shift differentials.
- Benefit deductions for coverage you didn’t choose.
- Retirement contributions at the wrong percentage.
- An outdated address, name or filing status.
The bottom line
A two-minute review of each pay stub can catch errors, confirm your benefits and help you plan your budget around the money you actually receive.
Frequently asked questions
Why did my net pay change when my salary didn’t?
Common reasons include new benefit elections, a change in retirement contributions, updated tax withholding or reaching an annual limit, such as the Social Security wage cap.
How long should I keep my pay stubs?
Keep them at least until you’ve compared them with your year-end W-2. Many people keep a full year of stubs, and longer if they’re applying for a mortgage.
This guide is for educational purposes only and isn’t personalized financial, investment, tax or legal advice. Rules, limits and rates change, so confirm current figures with official sources or a qualified professional.