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How to Read a US Paycheck Stub: Gross Pay, Net Pay, and Deductions

A US pay stub packs a lot of information into a small space. Here is what each line generally means.

Gross pay: your total earnings before anything is taken out

Gross pay is your full earnings for the pay period β€” hourly wages times hours worked, or a portion of an annual salary β€” before any taxes or deductions are subtracted. It is the number often quoted when discussing salary, but it is not what actually lands in your bank account.

Net pay: what you actually take home

Net pay, sometimes called "take-home pay," is gross pay minus all taxes and deductions. This is the amount that is actually deposited into your bank account or handed to you as a paycheck.

Federal income tax withholding

Employers withhold an estimated amount of federal income tax from each paycheck based on the information you provided on Form W-4, such as filing status and number of dependents. This is a prepayment toward your actual tax bill, reconciled when you file your annual tax return.

State and local income tax withholding

Most states with an income tax also withhold a portion from each paycheck, and some cities or counties add their own local income tax withholding on top. A handful of states have no state income tax at all, so this line does not appear on every pay stub.

FICA: Social Security tax (6.2%)

Social Security tax is withheld at a flat 6.2% of wages up to an annual wage base limit set by the Social Security Administration and adjusted periodically; earnings above that limit in a given year are not subject to additional Social Security tax. Your employer pays a matching 6.2% on your behalf, which does not come out of your paycheck.

FICA: Medicare tax (1.45%, or more at higher incomes)

Medicare tax is withheld at 1.45% of all wages, with no wage base limit. Employees with earnings above a threshold set by filing status owe an Additional Medicare Tax of 0.9% on the amount over that threshold, which shows up as extra withholding once you cross it.

Pretax deductions

Contributions to things like a traditional 401(k), a Health Savings Account (HSA), or employer health insurance premiums are often deducted before taxes are calculated, which lowers your taxable income and, in turn, your tax withholding for that pay period.

Post-tax deductions

Some deductions, such as Roth 401(k) contributions or certain benefit elections, are taken out after taxes are already calculated, so they reduce your take-home pay without lowering your taxable income.

Year-to-date (YTD) totals

Most pay stubs include a running year-to-date column next to each line item, showing the cumulative total for the calendar year so far. This is useful for tracking progress toward limits like the Social Security wage base or a 401(k) contribution limit.

Why your raise never fully shows up in take-home pay

A salary increase raises gross pay, but taxes and any percentage-based deductions, like a 401(k) contribution set as a percent of salary, scale up along with it. That is part of why a raise on paper often translates into a smaller-than-expected bump in the actual deposit that hits your bank account.

A pay stub is not the same as a tax return

Withholding on a pay stub is only an estimate of what you will owe for the year, based on the information on your W-4 and assumptions about your income staying steady. Your actual tax liability is settled when you file your annual tax return, which is why some people get a refund and others owe additional tax despite having taxes withheld all year.

Frequently Asked Questions

Why does my pay stub show more deductions than just taxes?

Beyond federal and state taxes and FICA, a stub often lists voluntary deductions you elected, such as health insurance premiums, retirement plan contributions, life insurance, or union dues, each shown as its own line so you can see exactly where your gross pay goes.

What is the difference between a W-2 and a pay stub?

A pay stub summarizes a single pay period, while a W-2 is an annual tax form your employer issues after year-end, summarizing your total wages and total taxes withheld for the entire year, which you use to file your tax return.

Can I change how much federal tax is withheld from my paycheck?

Yes. Submitting an updated Form W-4 to your employer lets you adjust your withholding, for example to account for a second job, additional dependents, or a preference for a larger refund versus more take-home pay throughout the year.