How to Read Your Pay Stub: A Complete Guide for Employees

What is a Pay Stub?

A pay stub, also known as a paycheck stub or earnings statement, is a document that accompanies your paycheck. It provides a detailed breakdown of how your pay was calculated and what deductions were taken out. Understanding your pay stub is essential for managing your finances and ensuring your employer is paying you correctly.

Key Sections of a Pay Stub

1. Employee Information

This section contains your basic information including your name, address, and often your employee ID or Social Security number (usually masked for security). Double-check this information to ensure it matches your records.

2. Pay Period Information

Your pay stub will show the dates covered by this paycheck. Common pay periods include:

• Weekly: 52 paychecks per year
• Bi-weekly: 26 paychecks per year
• Semi-monthly: 24 paychecks per year
• Monthly: 12 paychecks per year

3. Gross Pay

Gross pay is the total amount you earned before any deductions. For hourly employees, this is calculated by multiplying your hourly rate by hours worked. For salaried employees, it's your annual salary divided by the number of pay periods.

Formula for hourly: Regular Hours × Hourly Rate + Overtime Hours × Overtime Rate = Gross Pay

4. Deductions

Deductions are amounts subtracted from your gross pay. They fall into two categories:

Pre-Tax Deductions

• 401(k) contributions
• Health insurance premiums
• HSA/FSA contributions
• Dental and vision insurance

Taxes

• Federal Income Tax: Based on your W-4 and tax bracket
• State Income Tax: Varies by state (some states have none)
• Social Security: 6.2% up to the wage base limit
• Medicare: 1.45% on all wages (additional 0.9% over $200,000)

5. Year-to-Date (YTD) Totals

YTD totals show your cumulative earnings and deductions from the beginning of the calendar year. These are crucial for:

• Tracking your annual income
• Verifying Social Security wage limits
• Preparing for tax season
• Budgeting and financial planning

6. Net Pay

Net pay, also called "take-home pay," is what you actually receive after all deductions. This is the amount deposited into your bank account or printed on your check.

Formula: Gross Pay - Pre-Tax Deductions - Taxes - Post-Tax Deductions = Net Pay

Common Pay Stub Abbreviations

Abbreviation	Meaning
FED TAX or FIT	Federal Income Tax
STATE TAX or SIT	State Income Tax
FICA-SS or OASDI	Social Security Tax
FICA-MED or HI	Medicare Tax
YTD	Year-to-Date
REG	Regular Hours/Pay
OT	Overtime

What to Check on Your Pay Stub

1. Verify your hours worked match your records
2. Confirm your pay rate is correct
3. Check that tax withholdings match your W-4
4. Ensure all deductions you authorized are present
5. Review YTD totals for accuracy

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