How to Read a Pay Stub
Your pay stub shows exactly how your paycheck was calculated — from gross earnings down to net take-home pay. Here is what every line means.
Key Terms at a Glance
| Term | What It Means |
|---|---|
| Gross Pay | Total earnings before any deductions |
| Net Pay | Take-home amount after all deductions |
| Federal Income Tax | Withheld based on W-4 filing status and allowances |
| State Income Tax | Withheld for your state (not applicable in 9 states with no income tax) |
| Social Security | 6.2% of wages up to the annual wage base |
| Medicare | 1.45% of all wages (no cap) |
| FICA | Combined label for Social Security + Medicare taxes |
| Pre-tax deductions | Items deducted before tax calculation (401k, FSA, health premiums) |
| Post-tax deductions | Items deducted after taxes (Roth 401k, wage garnishments) |
| YTD | Year-to-Date — cumulative total from Jan 1 to this pay period |
How Gross Pay Is Calculated
Gross pay is your total earnings for the pay period before any deductions. For hourly workers, it is hours worked times hourly rate. For salaried workers, it is the annual salary divided by pay periods.
Hourly: Gross Pay = Regular Hours × Rate + Overtime Hours × (Rate × 1.5)
Salary: Gross Pay = Annual Salary ÷ 26 (bi-weekly) or ÷ 24 (semi-monthly)
Deductions That Reduce Gross to Net
Federal Income Tax
Calculated using your W-4 form (filing status, additional withholding). Uses graduated tax brackets — higher earnings are taxed at higher rates on the marginal amount.
Social Security Tax (6.2%)
Applied to wages up to the annual wage base (adjusted annually by the IRS). Once you hit the wage base, no more Social Security is withheld for that year.
Medicare Tax (1.45%)
No cap — 1.45% applies to all wages. High earners (over $200,000) pay an additional 0.9% Additional Medicare Tax.
Pre-Tax Deductions
Traditional 401(k) contributions, FSA/HSA contributions, and employer-sponsored health insurance premiums are deducted before taxes, reducing your taxable income.
Post-Tax Deductions
Roth 401(k) contributions and wage garnishments come out after taxes are calculated. They reduce take-home pay but do not lower your taxable income.
Worked Example
Hourly employee, $20/hr, worked 80 hours (bi-weekly), single filer, standard W-4:
| Gross Pay | $1,600.00 | 80h × $20 |
| Federal Income Tax | −$152.00 | Estimate; varies by W-4 |
| Social Security (6.2%) | −$99.20 | $1,600 × 6.2% |
| Medicare (1.45%) | −$23.20 | $1,600 × 1.45% |
| State Income Tax | −$56.00 | Estimate; varies by state |
| Health Insurance (pre-tax) | −$80.00 | Employer plan deduction |
| Net Pay | $1,189.60 | Take-home |
These are illustrative estimates. Actual withholding depends on W-4, state, filing status, and deductions.
Frequently Asked Questions
What is gross pay on a pay stub?
Gross pay is your total earnings before any deductions. For hourly workers: hours × rate (plus any overtime). For salaried workers: annual salary divided by number of pay periods.
Why is my net pay different from what I expected?
Common reasons: your W-4 withholding settings, pre-tax deductions for benefits or 401(k), a state income tax you weren't accounting for, or overtime being taxed in a higher bracket in the supplemental withholding calculation.
What does YTD mean on a pay stub?
Year-to-Date (YTD) shows cumulative totals for each pay element from January 1 through the current paycheck. Useful for verifying annual totals and tracking Social Security wage base progress.
Last reviewed: August 2026
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