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How to Read Your Pay Stub: A Complete Guide

Decode your pay stub with this comprehensive guide to understanding every line item, abbreviation, and deduction on your paycheck.

January 18, 20256 min read

Your pay stub contains crucial information about your earnings and deductions, but it can look like a confusing jumble of numbers and abbreviations. This guide will help you understand every line on your pay stub.

Main Sections of a Pay Stub

Most pay stubs are divided into several key sections:

  • Personal Information: Your name, address, employee ID
  • Pay Period: Dates covered by this paycheck
  • Earnings: Gross pay and breakdown
  • Deductions: Taxes and other withholdings
  • Net Pay: Your take-home amount
  • Year-to-Date (YTD): Running totals for the year

    • Understanding Your Earnings Section

    Gross Pay

    This is your total earnings before any deductions. It may include:

    Regular Pay

  • Your standard hourly rate or salary
  • Example: 80 hours × $25/hour = $2,000

    • Overtime Pay

  • Usually 1.5× your regular rate for hours over 40/week
  • Example: 5 hours × $37.50/hour = $187.50

    • Other Earnings

  • Bonus: Performance or signing bonuses
  • Commission: Sales commissions
  • Tips: Reported tip income
  • Holiday Pay: Pay for company holidays
  • PTO: Paid time off used
  • Sick Pay: Sick leave used

    • Common Earnings Abbreviations

  • REG: Regular hours
  • OT: Overtime
  • DT: Double time
  • HOL: Holiday pay
  • VAC: Vacation pay
  • SICK: Sick pay
  • COMM: Commission

    • Decoding Tax Deductions

    Federal Taxes

    FIT, FWT, or Fed Tax (Federal Income Tax)

  • Based on your W-4 elections
  • Varies by income, filing status, and allowances
  • Example: $250 per paycheck

    • FICA-SS or OASDI (Social Security)

  • 6.2% of wages up to $168,600 (2025)
  • Example: $124 on $2,000 gross pay

    • FICA-Med or Medicare

  • 1.45% of all wages
  • Example: $29 on $2,000 gross pay

    • Add Med (Additional Medicare)

  • 0.9% on wages over $200,000 (single)
  • Only appears for high earners

    • State and Local Taxes

    SIT, SWT, or State Tax (State Income Tax)

  • Varies by state (some states have none)
  • Based on state W-4 or equivalent
  • Example: $80 per paycheck

    • SDI (State Disability Insurance)

  • Required in CA, HI, NJ, NY, RI, PR
  • Typically around 1% of wages
  • Example: $20 on $2,000 gross pay

    • Local Tax or City Tax

  • Some cities and counties have local income tax
  • Common in OH, PA, IN, KY, MD
  • Example: $40 per paycheck

    • Pre-Tax Deductions

    These reduce your taxable income, saving you money on taxes.

    401k, 403b, or TSP (Retirement Contributions)

  • Your contributions to employer retirement plan
  • Example: $200 (10% of $2,000)

    • HSA (Health Savings Account)

  • For high-deductible health plans
  • Triple tax advantage
  • Example: $150 per paycheck

    • FSA (Flexible Spending Account)

  • Medical or dependent care expenses
  • Use-it-or-lose-it
  • Example: $100 per paycheck

    • Health, Dental, Vision (Insurance Premiums)

  • Your portion of insurance premiums
  • Employer usually pays majority
  • Example: $75 per paycheck

    • Commuter (Transportation Benefits)

  • Pre-tax parking or transit costs
  • Example: $100 per paycheck

    • Post-Tax Deductions

    These come out after taxes are calculated.

    Roth 401k (After-Tax Retirement)

  • Retirement contributions with after-tax dollars
  • Tax-free withdrawals in retirement
  • Example: $150 per paycheck

    • Life Insurance (Supplemental Coverage)

  • Additional life insurance premiums
  • Example: $15 per paycheck

    • Disability (Disability Insurance)

  • Short-term or long-term disability coverage
  • Example: $25 per paycheck

    • Union Dues

  • Required for union members
  • Example: $50 per paycheck

    • Garnishment

  • Court-ordered deductions
  • Child support, tax liens, student loans
  • Example: varies

    • Understanding Year-to-Date (YTD)

    The YTD column shows running totals from January 1 to the current pay period.

    Why YTD Matters:

  • Track total annual earnings
  • Verify Social Security wage base limit
  • Prepare for tax filing
  • Monitor retirement contributions
  • Check benefit usage

    • Example YTD Section:

  • Gross Pay YTD: $45,000
  • Federal Tax YTD: $6,750
  • Social Security YTD: $2,790
  • Medicare YTD: $652.50
  • 401k YTD: $4,500

    • Net Pay: Your Take-Home

    Net Pay or Take-Home Pay

    This is what actually goes into your bank account.

    Calculation:

    Gross Pay - All Deductions = Net Pay

    Example:

  • Gross Pay: $2,000
  • Total Deductions: $625
  • Net Pay: $1,375

    • Pay Period Information

    Pay Date: When you receive payment

    Pay Period: Dates covered (e.g., 1/1/2025 - 1/15/2025)

    Pay Frequency: How often you're paid

  • Weekly: 52 paychecks/year
  • Bi-weekly: 26 paychecks/year
  • Semi-monthly: 24 paychecks/year
  • Monthly: 12 paychecks/year

    • Common Pay Stub Errors to Watch For

    1. Incorrect Hours

  • Verify regular and overtime hours match your timesheet
  • Check that your hourly rate is correct

    • 2. Wrong Tax Withholding

  • Ensure federal and state withholding matches your W-4
  • Check that you're not over-withholding

    • 3. Missing Deductions

  • Verify all voluntary deductions are present
  • Check that employer contributions are showing (if applicable)

    • 4. YTD Discrepancies

  • YTD should increase each pay period
  • Compare to previous pay stubs

    • 5. Social Security Cap

  • Once you hit $168,600, SS tax should stop
  • You may need to claim refund if you have multiple jobs

    • How to Use Your Pay Stub

    For Budgeting

  • Base your budget on net pay, not gross
  • Track YTD to project annual income
  • Monitor deductions for budget planning

    • For Tax Planning

  • Review withholding to avoid surprises
  • Track pre-tax deductions for tax benefits
  • Keep pay stubs for tax filing

    • For Loan Applications

  • Lenders often require recent pay stubs
  • Shows stable income and employment
  • Demonstrates ability to repay

    • For Benefits Verification

  • Confirm insurance deductions
  • Track retirement contributions
  • Verify employer matches

    • Digital vs. Paper Pay Stubs

    Digital Pay Stubs:

  • Access through employer portal
  • Environmentally friendly
  • Easy to store and organize
  • Can be lost if company changes systems

    • Paper Pay Stubs:

  • Physical record
  • No technology needed
  • Can be lost or damaged
  • Takes up storage space

    • Best Practice: Download and save digital pay stubs as PDFs for your records.

    When to Contact HR or Payroll

    Contact your employer if you notice:

  • Incorrect pay rate or hours
  • Missing deductions or contributions
  • Wrong tax withholding
  • Unexplained deductions
  • YTD totals that don't add up
  • Missing employer match

    • Conclusion

    Understanding your pay stub empowers you to:

  • Verify you're being paid correctly
  • Plan your budget accurately
  • Optimize your tax withholding
  • Track your benefits and deductions
  • Catch errors quickly

    • Take a few minutes each pay period to review your pay stub. It's your money - make sure everything is correct!

    Use our paycheck calculator to estimate your pay stub and understand how different factors affect your take-home pay.

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