What is 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 federal tax, state tax, Social Security, Medicare, and any pre-tax deductions (401k, health insurance, HSA) are subtracted. On a typical paycheck, net pay is 65-80% of gross pay depending on your tax bracket and deductions.

What are FICA taxes on my pay stub?

FICA stands for Federal Insurance Contributions Act and includes Social Security tax (6.2% of gross pay up to $184,500 in 2026) and Medicare tax (1.45% of all gross pay, with an additional 0.9% on income over $200,000). Combined, FICA takes 7.65% from most paychecks. Your employer pays a matching 7.65% that does not appear on your stub.

What does YTD mean on a pay stub?

YTD means Year-To-Date — the cumulative total from January 1st through the current pay period. YTD gross shows your total earnings so far this year. YTD deductions show total taxes and contributions withheld. These figures help you track whether your withholding is on pace with your annual tax liability.

Why is my take-home pay so much less than my salary?

Multiple deductions reduce your gross pay: federal income tax (10-37% marginal), state income tax (0-13%), Social Security (6.2%), Medicare (1.45%), plus voluntary pre-tax deductions like 401(k) contributions and health insurance premiums. An $80,000 salary typically results in about $58,000-$62,000 in annual take-home pay, depending on state and deductions.

Should I check my pay stub every time?

Yes, at minimum check the first stub of the year and after any changes (raise, W-4 update, benefits enrollment). Errors in pay stubs are more common than people realize — wrong hours, incorrect tax withholding, unauthorized deductions, or missing overtime. Catching an error early prevents compounding problems throughout the year.

Paycheck EducationUpdated April 202610 min read

How to Read Your Pay Stub: Every Line Explained

The essentials: Your pay stub has four key sections: Earnings (gross pay before deductions), Taxes (federal, state, FICA), Deductions (401k, insurance, HSA), and Net Pay (what you take home). Most people only look at net pay, but understanding the other sections protects you from errors and helps you optimize your take-home. Use our paycheck calculator to verify your stub matches the correct calculations.

Section 1: Earnings — where it all starts

The earnings section shows your gross income for the pay period and year-to-date (YTD). Here's what each line means:

Regular Pay: Your base hourly rate × hours worked, or your salary divided by pay periods. For a $75,000 salaried employee paid biweekly, this is $2,884.62 per period.

Overtime Pay: Hours worked beyond 40/week × 1.5 your regular rate. If your regular rate is $25/hour and you worked 5 overtime hours, this shows $187.50 (5 × $37.50).

Bonus/Commission: Any supplemental income. Bonuses are often taxed at a flat 22% federal rate for withholding purposes, which is why your bonus paycheck can look different. See our bonus tax guide for details.

PTO/Holiday Pay: Paid time off or holiday pay at your regular rate. This appears when you use vacation days or when a paid holiday falls in the pay period.

Section 2: Taxes — the mandatory deductions

This is where most of the "missing" money goes. Every paycheck has four tax deductions at minimum:

Federal income tax

Calculated based on your W-4 form, filing status, and income level. This is the most variable tax — it can range from $0 to over 37% of your income depending on your bracket. On an $80,000 salary (single filer), federal withholding is approximately $600-$650 per biweekly paycheck. Our tax brackets guide explains the progressive rate structure.

State income tax

Varies by state. Nine states (TX, FL, WA, NV, WY, SD, AK, TN, NH) have no state income tax. Others range from a flat 3-5% to progressive rates up to 13% (California). If you see this line and live in a no-tax state, contact HR — it's an error.

Social Security (OASDI)

6.2% of gross pay up to $184,500 in 2026. On a $3,000 biweekly paycheck, this is $186. Once your YTD earnings exceed $184,500, this deduction stops for the rest of the year — that's when your paychecks suddenly get bigger in November or December.

Medicare (HI)

1.45% of all gross pay with no cap. On $3,000, that's $43.50. Earnings over $200,000 (single) trigger an additional 0.9% Medicare surtax. Combined with Social Security, FICA takes 7.65% of most paychecks.

📊 Tax breakdown on a $3,000 biweekly paycheck ($78,000/year, single, medium-tax state)

Federal income tax−$415

State income tax (5%)−$115

Social Security (6.2%)−$186

Medicare (1.45%)−$43.50

Total taxes: $759.50 (25.3% of gross). Before any voluntary deductions, taxes alone take about a quarter of this paycheck.

Section 3: Deductions — the voluntary items

These are benefits and contributions you've opted into. They reduce your gross pay, but unlike taxes, they provide direct value back to you.

Health insurance premium: Your share of employer-sponsored health coverage. Pre-tax, meaning it reduces your taxable income. Typical employee-only premiums run $100-$300 per paycheck.

401(k) / retirement contributions: Your pre-tax retirement contribution. A 6% contribution on $3,000 gross = $180 per paycheck. This reduces your taxable income, so a $180 contribution only reduces your take-home by about $130-$150 after the tax savings.

HSA / FSA contributions: Health Savings Account or Flexible Spending Account contributions. Pre-tax, with HSA offering triple tax benefits (tax-free in, growth, and qualified withdrawals). HSA limit is $4,400/year for individuals in 2026.

Other deductions: Life insurance, disability insurance, union dues, wage garnishments, or loan repayments. Check these carefully — unauthorized deductions are one of the most common payroll errors.

Section 4: Net pay — what you actually get

This is the bottom line — gross pay minus all taxes and deductions. It's what hits your bank account. Compare this to your bank deposit to make sure they match. If they don't, investigate immediately.

For our $3,000 gross example with the tax deductions above plus $180 for 401(k) and $130 for health insurance, net pay is approximately $1,930 — about 64% of gross. That's fairly typical for a single filer in a medium-tax state with modest retirement contributions. See your exact breakdown with the paycheck calculator.

The YTD column: your annual scorecard

Year-to-date totals track cumulative earnings and deductions from January 1st. Three YTD figures to watch:

YTD gross: Make sure this matches your expected annual income on pace. By June, it should be approximately half your annual salary.

YTD federal tax: Compare this to your expected annual tax liability. If you're on pace for a large refund or owe, adjust your W-4. Our deductions guide walks through this analysis.

YTD Social Security: Once this reaches $184,500 × 6.2% = $11,439, the deduction stops. If you earn over $184,500, watch for this cap — it gives you a noticeable pay increase in your later paychecks.

Red flags to watch for

Wrong hours. Verify regular and overtime hours match your records. Even a 1-hour discrepancy per paycheck costs you $500+ over a year at $25/hour.

Missing overtime premium. Some employers incorrectly pay straight time for overtime hours. You're entitled to 1.5× for hours over 40/week under FLSA. Check the Department of Labor FLSA page for your rights.

Deductions you didn't authorize. New deductions that appear without your consent should be questioned immediately. This includes supplemental insurance products, parking fees, or charitable contributions you didn't agree to.

State tax when you live in a no-tax state. If you moved from a taxing state to a non-tax state but your employer didn't update your payroll, you could be losing hundreds per month unnecessarily.

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Pay Stub Questions

What's the difference between gross and net pay?

Gross is total before deductions. Net is what you receive after taxes and deductions. Net is typically 65-80% of gross.

What are FICA taxes?

Social Security (6.2% up to $184,500) plus Medicare (1.45% on all income). Combined 7.65%. Your employer pays a matching amount.

What does YTD mean?

Year-To-Date — cumulative totals from January 1st through the current pay period. Helps track whether your withholding is on pace with your annual tax liability.

Why is take-home so much less than salary?

Federal tax (10-37%), state tax (0-13%), FICA (7.65%), plus 401(k) and insurance premiums. An $80K salary typically nets $58K-$62K take-home.

Should I check my stub every time?

At minimum, check after any change (raise, W-4, benefits). Payroll errors are more common than expected. Catching issues early prevents compounding problems.

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Team PaycheckPeek.com

We build paycheck calculators and income tools that help workers understand their earnings, deductions, and take-home pay. All calculations are based on current IRS tax brackets and FICA rates.

This content is for educational purposes only. Tax rates and FICA thresholds are based on 2026 IRS guidelines. Consult a qualified tax professional or your HR department for questions about your specific pay stub.