Arnold Tucker
A pay stub is the itemized statement that accompanies every paycheck, breaking down gross wages, tax withholdings and other deductions so you can see exactly how your earnings turned into the deposit that landed in your account. Reading one correctly is the first step toward catching payroll errors before they cost you money.
At a Glance
- A pay stub splits into three broad sections: gross earnings, tax withholdings, and other deductions.
- Net pay, also called take home pay, is gross pay minus every deduction listed on the stub.
- FICA withholding for 2025 runs 6.2% for Social Security (capped at $176,100 in wages) and 1.45% for Medicare (no cap), each matched by the employer.
- High earners face an extra 0.9% Medicare surtax on wages above $200,000 in a calendar year.
- Lenders, landlords, and benefits agencies routinely request pay stubs to verify income, so accuracy matters beyond your own budgeting.
What a Pay Stub Actually Shows
Every pay stub, regardless of the payroll software generating it, is organized around the same basic logic. First comes the pay itself: your hourly rate and hours worked if you're paid hourly, or your salary allocation for the period if you're exempt. Overtime, if applicable, shows up here too. Then come the tax withholdings, and finally any other deductions, things like insurance premiums or retirement contributions, that reduce gross pay down to what actually hits your bank account.
Somewhere on the stub you'll also find the pay period (the calendar span the check covers), the pay date, and a running year to date figure for gross pay, taxes, and net pay. That YTD column is worth checking periodically, since it's the fastest way to spot a withholding error that's been compounding for months rather than a one off mistake.
Why Scrutinizing Your Stub Is Worth the Time
Few employees actually read their pay stubs line by line, and that's a mistake with real financial consequences. Your stub is the primary evidence you have if your employer misclassifies your hours, miscalculates overtime, or withholds the wrong amount of tax. It's also the document lenders and landlords lean on to verify income when you apply for a mortgage, auto loan, or apartment lease, and government agencies or nonprofits may ask for it when processing financial aid or assistance applications. Treat it less like a receipt to file away and more like an audit trail you're responsible for checking.
Breaking Down the Core Line Items
| Line Item | What It Represents | Where Errors Typically Hide |
|---|---|---|
| Gross pay | Total earnings before any deductions or withholdings | Wrong hourly rate, missed overtime, incorrect salary proration |
| Federal income tax | Withholding based on your W-4 elections and IRS estimated brackets | Outdated W-4 after a life change (marriage, new dependent, second job) |
| State and local tax | Varies by jurisdiction; some states (Florida, Texas) have none | Withholding for the wrong state after a move or remote work change |
| FICA (Social Security) | 6.2% of wages up to $176,100 in 2025, matched by employer | Withholding continuing past the wage cap |
| FICA (Medicare) | 1.45% of all wages, no cap; additional 0.9% above $200,000 | Surtax miscalculated for employees with multiple employers |
| Insurance premiums | Health, dental, vision, life, disability contributions | Deductions continuing after a plan change or dependent removal |
| Retirement contributions | Employee elective deferrals to a 401(k) or similar plan | Contribution percentage not matching your most recent election |
| Net pay | Gross pay minus all taxes and deductions; the deposited amount | Should reconcile exactly with your bank deposit |
Why FICA Withholding Confuses Almost Everyone
FICA, the Federal Insurance Contributions Act, is where most people's eyes glaze over, and understandably so. The Social Security piece is 6.2% of wages, matched by your employer for a combined 12.4%, but only up to a wage base that adjusts annually, $176,100 for 2025. Earn above that and the Social Security withholding should stop for the rest of the year; if it doesn't, that's a payroll error worth flagging. Medicare withholding is 1.45%, also matched by the employer, but it applies to all wages with no ceiling. Layer on top of that a 0.9% Additional Medicare Tax that kicks in once your earnings for the year cross $200,000, a provision that trips up plenty of high earners because their employer's payroll system may not account for outside income from a second job.
Where Federal and State Tax Withholding Gets Approximate
Federal income tax withholding isn't a precise calculation, it's an estimate. Your employer reports your salary and the elections on your W-4 form to the government, and the IRS's withholding tables produce a rough annualized figure that gets divided across your pay periods, typically 12, 24, or 26 times a year. Hourly workers go through a similar estimation process based on projected monthly income. Because it's an estimate rather than an exact reconciliation, it's routinely wrong in one direction or the other, which is why refunds (and, less pleasantly, tax bills) happen every April. If your household situation changes, a marriage, a new dependent, a second job, notify HR promptly so your withholding gets adjusted rather than waiting for the mismatch to surface at filing time.
State and local taxes follow the same general logic but vary enormously by geography. Some states, Florida and Texas among them, levy no state income tax at all, while others impose both state and local withholding. Assuming your income is steady, these withholdings should stay flat pay period to pay period, which makes them easy to sanity check against prior stubs.
The Deductions Beyond Taxes
Once taxes are accounted for, the remaining deductions are typically benefits you've elected, and they deserve the same scrutiny as tax withholding. Health, dental, vision, life, and disability insurance premiums usually appear under a header like
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