How to Read a Pay Stub: Every Line Explained

A pay stub tells one story from top to bottom: what was earned (gross pay), what was taken out (taxes and deductions), and what was actually paid (net pay). Next to each current amount, most stubs also show a year-to-date (YTD) total. Once you know the order, any stub, from any payroll system, is quick to read and easy to check.

This guide walks through every section in the order it usually appears, explains what each line means, and shows the checks a small business owner or bookkeeper should run before a stub goes out.

1. The header: who, when and for what period

The top of the stub identifies the people and dates involved. Expect to see:

• Employer name and address: the legal business that pays the wages.
• Employee name and usually an employee ID or the last four digits of the Social Security number. Showing the full SSN is unnecessary and best avoided.
• Pay period: the first and last day of work covered by this payment.
• Pay date: the day the money is paid. It is often a few days after the period ends.
• Pay frequency on some stubs (weekly, biweekly, semimonthly or monthly).

The pay period and the pay date are different things, and both matter. Taxes follow the pay date: wages paid on January 2 belong to the new tax year even if the work was done in December.

2. Earnings: how gross pay is built

The earnings section lists each type of pay as its own line, usually with hours, rate and amount:

• Regular pay: hours times the hourly rate, or the salary amount for the period.
• Overtime: hours over 40 in a workweek for non-exempt employees under federal law, normally at one and a half times the regular rate. Some states add daily overtime rules.
• Other earnings: bonuses, commissions, tips, holiday pay, paid time off and reimbursements, each on a separate line.

Gross pay is the sum of all earnings lines before anything is withheld. It is the starting point for every calculation that follows, so check it first: hours times rate should equal the amount on each line.

Time off balances

Many stubs also show vacation, sick or PTO balances: hours accrued, used and remaining. These are not money, but they are part of a clear payroll record and help avoid disputes later.

3. Pre-tax deductions

Pre-tax deductions come out of gross pay before some or all taxes are calculated, which lowers taxable wages. Common examples:

• Traditional 401(k) contributions. According to the IRS, elective deferrals are generally not subject to federal income tax withholding, but they are still included as wages for Social Security, Medicare and federal unemployment tax (IRS 401(k) overview).
• Health, dental and vision premiums paid through a Section 125 cafeteria plan, and HSA or FSA contributions made through the plan. These are generally excluded from both income tax and Social Security and Medicare wages (IRS Publication 15-B).

This is why a stub can show different taxable wage amounts for different taxes. Federal income tax wages may be lower than Social Security wages when the employee contributes to a traditional 401(k).

4. Taxes withheld

This is usually the longest section. Each tax gets its own line with a current amount and a YTD amount.

Federal income tax

Calculated from taxable wages, the pay frequency and the employee's Form W-4 (filing status, multiple jobs, dependents and other adjustments). Two employees with the same gross pay can have very different federal withholding.

Social Security (OASDI)

The employee rate is 6.2% of Social Security wages, up to an annual wage base. For 2026 the wage base is $184,500 (Social Security Administration). Once YTD Social Security wages reach that amount, this line should drop to zero for the rest of the year. The employer pays a matching 6.2%, which does not appear as a deduction on the employee's stub.

Medicare

The employee rate is 1.45% of all Medicare wages, with no wage base. Employers must also withhold an Additional Medicare Tax of 0.9% on wages paid to an employee above $200,000 in a calendar year, regardless of filing status, and there is no employer match for that extra 0.9% (IRS Topic 560).

State and local taxes

Depending on where the employee lives and works, you may see state income tax, local or city income tax, and state programs such as disability or paid family leave contributions. Some states have no state income tax on wages at all, so an empty state line is not automatically an error. Our state pages summarize what applies where.

5. Post-tax deductions

Post-tax deductions are taken after taxes are calculated, so they do not reduce taxable wages. Typical examples are Roth 401(k) contributions, some insurance premiums, union dues, charitable contributions and wage garnishments ordered by a court or agency. Each should be listed separately with a clear description.

6. Net pay: the bottom line

Net pay is what the employee actually receives:

Net pay = gross pay − pre-tax deductions − taxes withheld − post-tax deductions

If the employee is paid by direct deposit, the stub (or a separate direct deposit advice) may show how net pay was split across bank accounts, usually with only the last digits of each account number. The amounts deposited must add up to net pay exactly.

7. Year-to-date (YTD) columns

Every money line normally has a YTD column: the running total from the first pay date of the calendar year through this one. YTD figures are how you, your employee and your accountant confirm that the year adds up. They also drive two automatic limits: the Social Security wage base and the Additional Medicare Tax threshold. At year end, YTD totals on the last stub should line up with the employee's Form W-2. We cover this in detail in our guide to YTD totals.

8. A quick checklist before you issue a stub

1. Dates: the pay period and pay date are correct and the pay date falls in the right tax year.
2. Earnings: hours times rate equals each earnings line, and overtime is calculated per workweek.
3. Deductions: each one is authorized and classified correctly as pre-tax or post-tax.
4. Taxes: withholding matches the current Form W-4 and state forms; Social Security stops at the wage base.
5. Math: gross minus everything withheld equals net pay to the cent.
6. YTD: last stub's YTD plus this stub's current amounts equals this stub's YTD.

Is a pay stub required?

Under federal law, the U.S. Department of Labor states that the Fair Labor Standards Act requires accurate records of hours worked and wages paid, but does not require employers to give employees pay stubs (DOL FAQ). Many states do require a written or electronic pay statement, so check your state's rules. Either way, a clear stub for each payday is the simplest way to keep your payroll records organized and to answer employee questions quickly.

Create clear, accurate pay stubs

PayStubNest calculates federal and state withholding, carries YTD totals forward from one stub to the next, and lets you choose from 18 pay stub designs, with time off balances and a direct deposit advice if you need them. You can create a pay stub and preview the layout for free before you pay. For more detail on specific topics, browse our guides or the FAQ.