Your pay stub is more than just a slip of paper—it's a detailed financial document that shows exactly how your employer calculated your paycheck. Whether you're an employee checking for accuracy, a freelancer creating documentation, or a renter providing proof of income for an apartment application, knowing how to read a pay stub is an essential financial literacy skill.
According to financial experts at Earnin and SoFi, understanding your pay stub helps you budget effectively, catch payroll errors, plan for taxes, and verify your compensation package.
What Is a Pay Stub?
A pay stub (also called a paycheck stub, pay slip, or earnings statement) is a document that accompanies your paycheck, detailing your earnings and deductions for a specific pay period. It shows both current period amounts and year-to-date (YTD) totals.
- Verify accurate payment
- Track income for taxes
- Prove income for loans/rentals
- Monitor benefits/deductions
Most states require employers to provide pay stubs, but requirements vary. Some states mandate physical or electronic pay stubs, while others have "access states" where employees can view their information on demand. (Source: PNC)
9 Key Sections of a Pay Stub (Explained)
Every pay stub contains several standard sections. Here's what each one means and why it matters:
1Personal & Employer Information
Located at the top of your pay stub, this section includes:
- Your name and address
- Employee ID or last 4 digits of SSN
- Employer name and address
- Employer Identification Number (EIN)
2Pay Period & Pay Date
Pay Period
The range of dates you're being paid for (e.g., "10/01/2024 - 10/15/2024"). This could be:
- • Weekly: 7 days
- • Bi-weekly: 14 days (most common)
- • Semi-monthly: Twice per month (1st-15th, 16th-end)
- • Monthly: Full calendar month
Pay Date
The actual date your paycheck was issued or deposited into your account. This is typically a few days after the pay period ends to allow for payroll processing.
3Gross Pay (Total Earnings)
Gross pay is your total earnings before any deductions or taxes are taken out.
Your gross pay typically includes:
Regular Earnings
- • Base salary or hourly wages
- • Standard working hours
- • Regular rate of pay
Additional Earnings
- • Overtime pay (typically 1.5x)
- • Bonuses and commissions
- • Holiday/premium pay
- • Tips (if reported)
Calculation Example:
4Hours Worked
For hourly employees, this section breaks down your time worked by category:
| Category | Description | Pay Rate |
|---|---|---|
| Regular Hours | Standard hours up to 40/week | Base hourly rate |
| Overtime (OT) | Hours beyond 40/week | 1.5× base rate |
| Double Time | Holidays or excessive OT | 2× base rate |
| PTO Used | Paid Time Off taken | Base hourly rate |
5Taxes & Mandatory Withholdings
These are mandatory deductions required by federal and state law:
Federal Income Tax (FIT or FWT)
Federal tax withheld based on your W-4 form, filing status, and income level. The U.S. uses a progressive tax system with rates from 10% to 37%.
What it funds: Federal government programs, defense, infrastructure, social programs
State Income Tax (SIT or SWT)
State tax varies by location. Nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) have no state income tax.
Learn more: Texas pay stubs, Florida pay stubs, California pay stubs, New York pay stubs
FICA Taxes (Social Security & Medicare)
FICA (Federal Insurance Contributions Act) includes two components:
Social Security (SS)
6.2% of wages
2024 wage limit: $168,600
Funds retirement benefits
Medicare (Med)
1.45% of all wages
No wage limit
Funds healthcare for 65+
High earners (over $200K single/$250K married) pay an additional 0.9% Medicare tax. (Source: SoFi)
Local/City Taxes
Some cities and counties impose additional income taxes (e.g., New York City, San Francisco). These will appear as separate line items.
6Voluntary Deductions
These are optional deductions you've chosen or agreed to:
Health Insurance Premiums
Medical, dental, vision coverage. Often pre-tax, reducing your taxable income.
Retirement Contributions (401(k), 403(b), IRA)
Pre-tax contributions to retirement accounts. May include employer matching.
Health Savings Account (HSA) / FSA
Pre-tax savings for medical expenses.
Life Insurance / Disability Insurance
Premiums for supplemental coverage.
Union Dues
Membership fees for labor unions.
Wage Garnishments
Court-ordered deductions for child support, student loans, or debts.
7Net Pay (Take-Home Pay)
Net pay is the amount you actually receive after all taxes and deductions are subtracted from your gross pay.
The Calculation:
This is the amount deposited into your bank account (direct deposit) or printed on your physical paycheck. This is your actual take-home pay that you can budget and spend.
8Year-to-Date (YTD) Totals
YTD (Year-to-Date) shows cumulative totals from January 1st through your current pay period. Every line item (gross pay, taxes, deductions, net pay) typically has a YTD column.
Why YTD Matters:
- Tax planning: Track how much tax you've paid to estimate your annual liability
- Verify W-2: Your December YTD totals should match your W-2 form
- Benefits tracking: Monitor retirement contributions and insurance premiums
- Income verification: Show annual income for loans, mortgages, or apartment applications
Example YTD Section (As of 10/15/2024):
| Item | Current Period | YTD Total |
|---|---|---|
| Gross Pay | $2,687.50 | $55,437.50 |
| Federal Tax | $320.50 | $6,610.50 |
| Social Security | $166.63 | $3,437.13 |
| 401(k) | $134.38 | $2,771.88 |
| Net Pay | $1,742.64 | $35,954.32 |
9Employer Contributions & Benefits
Some pay stubs include a section showing what your employer contributes on your behalf. These amounts are not deducted from your pay—they're additional compensation.
Employer Pays:
- • Employer portion of FICA (7.65%)
- • 401(k) matching contributions
- • Health insurance premium share
- • FUTA & SUTA (unemployment taxes)
- • Worker's compensation insurance
Why This Matters:
These contributions represent your total compensation beyond your gross pay. When comparing job offers, consider both salary and benefits value.
Example: A $55K salary with 5% 401(k) match and employer-paid health insurance might be worth $65K+ in total compensation.
Common Pay Stub Abbreviations Decoded
Pay stubs are packed with abbreviations. Here's your quick reference guide:
Gross Pay vs. Net Pay: What's the Difference?
Your total earnings before any taxes or deductions are taken out.
Includes:
- ✓ Base salary/hourly wages
- ✓ Overtime pay
- ✓ Bonuses & commissions
- ✓ Tips (if applicable)
- ✓ Holiday pay
Example:
$2,687.50
Your actual take-home pay after all taxes and deductions are subtracted.
After subtracting:
- − Federal & state taxes
- − Social Security & Medicare
- − Health insurance
- − Retirement (401k)
- − Other benefits
Example:
$1,742.64
(65% of gross pay)
7 Common Pay Stub Errors to Check For
Payroll mistakes are more common than you think. Review your pay stub every pay period and watch for these errors:
Check: Compare hours on your pay stub to your timesheet. Verify regular vs. overtime hours are correctly categorized.
Why it matters: This directly impacts your gross pay and is one of the most common errors.
Check: Ensure your hourly rate or salary matches your employment agreement. Verify overtime is paid at 1.5× your regular rate.
Check: If you're owed a bonus or commission, verify it appears on your stub in the pay period it was earned or promised.
Check: If your federal tax withholding seems too high or low, review your W-4 form. Update it if your personal situation changed (marriage, dependents, etc.).
Use the IRS Tax Withholding Estimator to check if you're on track.
Check: Verify each deduction appears only once and matches your enrollment elections. Watch for double-charging on insurance premiums or retirement contributions.
Check: Ensure your name, address, and SSN are correct. Errors can cause tax filing issues and prevent your W-2 from matching IRS records.
Check: Your current YTD amount should equal last pay period's YTD plus this period's amount. If it doesn't, there may be a calculation error.
Pay Stub Requirements by State
Pay stub laws vary significantly by state. Understanding your state's requirements ensures your employer is complying with the law:
Employers must provide access to pay information electronically or on paper.
Examples: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Ohio, South Dakota, Tennessee
Electronic access OK, but employees must be able to print their own pay stubs.
Examples: Iowa, Kansas, Kentucky, Michigan, Montana, Nebraska, New Jersey, New York, North Dakota, Pennsylvania, Virginia, Wisconsin
Employers must provide printed pay stubs (unless employee consents to electronic).
Examples: California, Colorado, Connecticut, Hawaii, Massachusetts, New Mexico, North Carolina, Oregon, Vermont, Washington
While requirements vary, most states require pay stubs to include:
Frequently Asked Questions About Reading Pay Stubs
Gross pay is your total earnings before any deductions or taxes are taken out. Net pay (take-home pay) is what you actually receive after all taxes, insurance premiums, retirement contributions, and other deductions are subtracted from your gross pay.
YTD stands for Year-to-Date. It shows the cumulative total of your earnings, deductions, and taxes from January 1st through your current pay period. YTD figures are essential for tracking annual income and preparing your tax return.
FICA stands for Federal Insurance Contributions Act. It includes two mandatory taxes: Social Security tax (6.2% of wages up to $168,600 in 2024) and Medicare tax (1.45% of all wages). Together, these fund Social Security retirement benefits and Medicare healthcare programs.
Formula: Net Pay = Gross Pay − (Federal Tax + State Tax + FICA + Other Deductions)
As a rule of thumb, most employees take home 65-80% of their gross pay, but this varies based on your tax bracket, state, and benefit elections. Use our pay stub calculator for precise calculations.
It depends on your state. Most states require employers to provide pay stubs, but the requirements vary—some states require printed copies, others allow electronic access. Check your state's labor laws or contact your state's Department of Labor for specifics.
Several factors can cause variations: overtime hours, bonuses, commission changes, adjustments to tax withholding (updated W-4), changes in benefit elections (health insurance enrollment), one-time deductions, or correcting previous pay period errors.
Financial experts recommend keeping pay stubs for at least one year, or ideally until you receive and verify your W-2 form. If you're self-employed or using pay stubs for major financial applications (mortgage, loan), keep them for 3-7 years in case of audits.
Yes! Pay stubs are one of the most common forms of income verification for apartment applications, loans, mortgages, and other financial purposes. Most landlords and lenders request 2-3 recent pay stubs to verify consistent income.
Self-employed individuals, freelancers, gig workers, and small business owners can create their own pay stubs using a professional pay stub generator to document income. Just ensure all information is accurate and truthful.
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Take Control of Your Finances
Understanding how to read your pay stub is a fundamental financial literacy skill that empowers you to verify accurate payment, catch errors, plan for taxes, and prove income when needed. By reviewing your pay stub each pay period and understanding every section—from gross pay to YTD totals—you take control of your financial life.
Whether you're an employee checking for accuracy or need to create professional pay stubs for your own income documentation, knowing what each number means ensures you're making informed financial decisions.