By James Walker — CFP® candidate, Boston MA · Updated January 2026
I have spent more time than I would like to admit explaining pay stubs to friends, family, and to myself during CFP studies. The line items are not hard once you see them named, but most employers do not bother teaching you what each acronym means. Let me walk through a typical US pay stub end to end so you can verify yours is correct.
What are the main sections of a pay stub?
Every US pay stub generally contains: employee/employer info, pay period dates, gross earnings, pre-tax deductions, taxes withheld, post-tax deductions, net pay, and year-to-date totals. The exact format varies by payroll provider (ADP, Gusto, Paychex, Workday) but the components are identical.
What is gross pay?
Gross pay is what you earned before any deductions. For salaried workers, it is your annual salary divided by the number of pay periods (24 for semi-monthly, 26 for biweekly). For hourly workers, it is hours worked times hourly rate plus any overtime (typically 1.5x for hours over 40/week per the Fair Labor Standards Act).
What are pre-tax deductions?
Pre-tax deductions reduce your taxable income for federal and (usually) state taxes. They include:
- 401(k) traditional contributions – per IRS, the 2026 limit is $23,500 employee contribution ($31,000 if 50+ with catch-up)
- Health insurance premiums – your share of medical, dental, vision premiums
- HSA contributions – up to $4,300 self / $8,550 family in 2026 per IRS
- FSA contributions – $3,300 healthcare FSA, $5,000 dependent care FSA in 2026
- Commuter benefits – up to $325/month for transit or parking in 2026
The key benefit: each dollar of pre-tax deduction saves you your marginal tax rate. A 22%-bracket worker contributing $5,000 to a 401(k) saves $1,100 in federal tax immediately.
What is federal income tax withholding?
Federal withholding is what your employer sends to the IRS based on the W-4 form you filled out at hire. The 2020+ W-4 no longer uses “allowances” – it uses dependents, multiple jobs, additional withholding, and deductions. Per IRS Tax Withholding Estimator, you should review your W-4 annually to avoid surprise tax bills or excessive refunds (a refund is just an interest-free loan to the government).
2026 federal tax brackets for single filers (approximate, verify on IRS): 10% to $11,925; 12% to $48,475; 22% to $103,350; 24% to $197,300; 32% to $250,525; 35% to $626,350; 37% above.
What is FICA on my pay stub?
FICA stands for Federal Insurance Contributions Act. It funds Social Security and Medicare. Per SSA:
- Social Security tax: 6.2% of wages up to the wage base limit ($176,100 in 2026)
- Medicare tax: 1.45% of all wages, no cap
- Additional Medicare: 0.9% surcharge on wages above $200,000 single / $250,000 married
Total FICA is 7.65% on most wages. Your employer also pays a matching 7.65% (self-employed workers pay both halves = 15.3% via SE tax on Schedule SE).
What is state and local tax?
State income tax varies wildly. No state tax: Alaska, Florida, Nevada, New Hampshire (limited), South Dakota, Tennessee, Texas, Washington, Wyoming. High-tax states: California (up to 13.3%), Hawaii (11%), New York (10.9% top), New Jersey (10.75%), Oregon (9.9%), Minnesota (9.85%), Massachusetts (5% flat but 4% surtax above $1M). Some cities (NYC, Philadelphia, San Francisco, parts of Ohio) add local income tax.
What are post-tax deductions?
Post-tax deductions come out after taxes. These include Roth 401(k) contributions (taxed now, withdrawals tax-free in retirement), garnishments (child support, court orders), union dues, life insurance premiums (if employee-paid), and disability insurance premiums.
Sample pay stub math for a $75K salary
Bi-weekly gross pay (26 periods): $2,884.62. Pre-tax: 401(k) at 10% = $288.46, health insurance = $200, HSA = $115.38. Taxable: $2,280.78. Federal withholding ~ $215. Social Security: $178.85. Medicare: $41.83. State (Massachusetts 5%): $114. Net take-home: roughly $1,730/paycheck or $44,980/year – but you also contributed $7,499 to retirement and $3,000 to HSA, so total compensation captured is closer to $55,500.
What should I check on every pay stub?
- Hours and pay rate match your records
- 401(k) contribution matches what you elected
- Health insurance premium matches your benefits enrollment
- YTD federal withholding is on pace to meet your target (avoid huge refunds or underpayments)
- State tax withholding reflects your actual state of work
- FICA cap is being respected if you are a high earner (after $176,100 in 2026, no more Social Security tax)
Related Reading on FinanceFernly
- How to read your 401(k) statement
- Filing taxes in multiple states
- Frugal budget on $30K
- Saving for retirement on $50K
Frequently Asked Questions
Why is my federal tax withholding higher this paycheck?
Common causes: a bonus (taxed at 22% flat federal supplemental rate per IRS), a one-time commission, the year-to-date method catching up, or a W-4 change. Bonuses typically show inflated withholding that washes out at tax time when you file your actual return.
Should I claim more allowances to take home more pay?
The post-2020 W-4 no longer uses allowances. To increase take-home, claim dependents, deductions, or list multiple jobs accurately. Use the IRS Tax Withholding Estimator before changing your W-4 – underwithholding can trigger underpayment penalties at filing time.
What is Imputed Income on my pay stub?
Imputed income is the taxable value of non-cash benefits your employer provides – like employer-paid life insurance over $50,000, gym memberships, or domestic partner health coverage. It is added to your gross for tax calculation but not paid to you in cash.
Why is my Social Security suddenly zero on December paychecks?
Because you hit the Social Security wage base ($176,100 in 2026). Once you cross that limit, no more Social Security tax is withheld until January when the limit resets. Medicare tax continues without a cap.
What if I find an error on my pay stub?
Contact your HR or payroll department immediately – errors are common and easier to fix in the current pay period than after year-end. Document the discrepancy in writing (email). Per the Department of Labor, employers must pay correct wages owed. If unresolved, contact your state labor department.
Final thoughts from a CFP candidate
Your pay stub is the most-ignored financial document most Americans receive twice a month. Spend ten minutes auditing it once per quarter. Verify retirement contributions are at the percentage you elected. Check that your HSA/FSA contributions are flowing through. Make sure year-to-date federal withholding is on pace. Catch errors before they compound across 26 pay periods.
Knowing what every line means also makes negotiating job offers easier – a $90K offer in Texas (no state tax) takes home meaningfully more than a $90K offer in California. Always compare offers in after-tax terms, not gross.
