How to Read a Paystub
A complete guide to understanding every section of your paycheck stub, from gross pay to deductions to your final take-home pay.
The Basic Formula
Understanding Each Section
Common Paystub Codes
Employers use abbreviations to save space. Here are the most common codes you'll see:
Regular hours/pay
Overtime hours/pay
Federal Income Tax
State Income Tax
Social Security Tax
Medicare Tax
Retirement contribution
Year-to-Date
Health insurance
Dental insurance
Vision insurance
Long-term disability
Example Paystub Calculation
Frequently Asked Questions
What's the difference between gross pay and net pay?
Gross pay is your total earnings before any deductions. Net pay (take-home pay) is what you actually receive after all taxes, insurance, retirement contributions, and other deductions are subtracted from your gross pay.
Why is my paycheck less than expected?
Your paycheck is reduced by mandatory deductions (federal tax, state tax, Social Security, Medicare) and voluntary deductions (401k, health insurance, etc.). If it seems too low, check your W-4 withholding elections or speak with HR.
What does YTD mean on my paystub?
YTD stands for Year-to-Date. It shows the cumulative total of that item from January 1st through the current pay period. YTD helps you track total annual earnings and deductions for tax planning.
Why are Social Security and Medicare always deducted?
FICA taxes (Social Security 6.2% and Medicare 1.45%) are mandatory for almost all employees. These fund Social Security retirement benefits and Medicare health coverage. Your employer pays an equal amount.
Can my employer make unauthorized deductions?
No, employers can only deduct: legally required taxes, amounts you've authorized in writing (like 401k or insurance), and court-ordered amounts (like garnishments). All deductions should be itemized on your paystub.
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