How to Read Your Pay Stub: A Complete Guide

Why Your Pay Stub Matters

Your pay stub (also called an earnings statement) is the only document that shows exactly where your money went between your gross salary and the amount that landed in your bank account. Learning to read it helps you catch payroll errors, understand your tax withholding, and plan your budget around your real take-home pay.

Section 1: Gross Pay

This is your total earnings for the pay period before anything is taken out — your salary divided by the number of pay periods, or your hourly rate times hours worked (including any overtime at 1.5×). Not sure which pay structure works out better for you? See our salary vs. hourly comparison.

Section 2: Pre-Tax Deductions

These come out before taxes are calculated, which lowers your taxable income. Common pre-tax deductions include:

• 401(k) / 403(b) retirement contributions
• Health insurance premiums (your share)
• HSA (Health Savings Account) contributions
• FSA (Flexible Spending Account) contributions
• Commuter and transit benefits

Section 3: Taxes Withheld

This is usually the biggest chunk. You'll typically see these lines:

• Federal Income Tax — based on your W-4, filing status, and income
• Social Security and Medicare — together these make up FICA taxes, a flat 7.65% for most employees
• State Income Tax — varies by state (zero in 9 states)
• Local Tax — city or county tax, if applicable

Section 4: Post-Tax Deductions

These come out after taxes are calculated and don't reduce your taxable income. Examples include Roth 401(k) contributions, wage garnishments, union dues, and certain life insurance premiums.

Worked Example: Reading a Real Pay Stub

What to Check For Errors

Compare your pay stub to your expectations each pay period. Watch for: the wrong filing status or number of dependents on your W-4, a 401(k) percentage that doesn't match what you elected, or a state/local tax that doesn't match where you actually work.