How to Read Your Pay Stub
From the desk of Jessie: ex-MBB consultant, writes the editorial here. See more by Jessie.
Your pay stub arrives every pay period, but do you understand what each line means? Between gross pay, federal withholding, state taxes, FICA taxes, and deductions, it's easy to feel lost. This guide breaks down every component of your paycheck so you know exactly where your money goes and can spot errors before they compound.
The Anatomy of a Pay Stub
Gross Pay
Gross pay is your total earnings before any deductions. If you earn a $75,000 annual salary, your gross biweekly pay is $75,000 ÷ 26 pay periods = $2,884.62. This is the amount your employer reports to the IRS and the number used to calculate all withholdings and deductions.
Federal Income Tax Withholding
This is the federal income tax your employer withholds from each paycheck based on your W-4 form. The amount depends on three factors: your filing status, the number of dependents you claimed, and your income. For someone earning $75,000 as a single filer with standard W-4 settings, federal withholding is typically $260-$290 per biweekly paycheck. If you're withholding too much, you'll get a large refund; too little, and you'll owe taxes on April 15th. Adjust your W-4 if your situation changes (marriage, new job, side income).
State Income Tax
Many states tax your income; others (Florida, Texas, Wyoming, etc.) don't. State withholding rates vary widely-from 0% in no-tax states to over 12% in high-tax states like California and New York. Using our $75,000 California example, state income tax withholding is roughly $110-$130 per biweekly paycheck. If you've moved states, update your W-4 with your state tax agency.
Social Security Tax
Social Security tax is a flat 6.2% of your gross pay, capped at $176,100 in 2026. So for our $75,000 earner, that's $75,000 × 6.2% = $4,650 annually, or $178.85 per biweekly paycheck. Once you hit the cap (typically in November for high earners), Social Security withholding stops for the remainder of the year. Your employer matches this 6.2%, though you only see your half on your pay stub.
Medicare Tax
Medicare tax is 1.45% of all your gross pay, with no income cap. For our $75,000 earner, that's $1,087.50 annually, or $41.88 per biweekly paycheck. Additionally, high earners pay an extra 0.9% Medicare tax on wages over $200,000 (single) or $250,000 (married filing jointly). Like Social Security, your employer matches your Medicare contribution.
Pre-Tax Deductions
Pre-tax deductions reduce your taxable income, meaning you pay less federal and state income tax. Common pre-tax deductions include:
- 401(k): Up to $23,500 in 2026. This amount is removed before calculating federal and state income tax, reducing your tax bill immediately.
- Health Insurance: Your employer plan premiums are typically pre-tax, saving you 15-25% on premiums through tax savings.
- HSA (Health Savings Account): Up to $4,300 (single) or $8,550 (family) in 2026. Triple tax-advantaged: deductible, growth is tax-free, and withdrawals for medical expenses are tax-free.
- FSA (Flexible Spending Account): Up to $3,300 in 2026 for medical expenses or $5,000 for dependent care.
- Commuter Benefits: Pre-tax transit and parking, up to $315/month in 2026.
Post-Tax Deductions
Post-tax deductions are taken after federal and state income taxes are calculated, so they don't reduce your tax burden. Common examples include:
- Roth 401(k): Contributions are after-tax, but grow tax-free in retirement.
- Supplemental Life Insurance: Additional life coverage beyond the employer-provided plan.
- Garnishments: Court-ordered deductions for child support, student loans, or creditor judgments.
- Voluntary Contributions: Additional purchases or memberships you've elected.
Net Pay (Take-Home)
Net pay is what you actually receive: gross pay minus all withholdings and deductions. For our $75,000 earner, the math looks like this (see worked example below).
Worked Example: $75,000 Salary in California
Let's walk through a real biweekly paycheck for a single filer earning $75,000/year in California, with no pre-tax deductions besides FICA.
| Gross Pay | $2,884.62 |
| Federal Income Tax | −$275.00 |
| State Income Tax (CA) | −$120.50 |
| Social Security Tax (6.2%) | −$178.85 |
| Medicare Tax (1.45%) | −$41.83 |
| Net Pay | $2,268.44 |
In this example, you bring home $2,268.44 of your $2,884.62 gross pay-about 78.6%. Over a year at 26 pay periods, that's $58,979 in net income. The remaining $16,021 goes to taxes and mandatory deductions.
If you contributed to a pre-tax 401(k) (say, $500/paycheck), that $500 would be subtracted before calculating federal and state income tax, lowering both withholdings slightly and resulting in an even lower net pay but higher long-term wealth due to tax deferral.
Verify Your Pay Stub
Check that gross pay matches your salary ÷ pay periods. Verify FICA taxes are calculated correctly. Confirm pre-tax deductions are subtracted before income tax. If anything looks wrong-or if you suspect your employer is underpaying-report it to your HR department or the Department of Labor.
Run Your Own Numbers
Ready to model your own paycheck? Use our Paycheck Calculator to see exactly how federal withholding, state taxes, and pre-tax deductions affect your take-home pay.
Frequently Asked Questions
Why is my federal withholding different each month?
Your federal withholding depends on your W-4 elections and year-to-date income. If you received a bonus, or if your pay varies, withholding may fluctuate. Additionally, the IRS adjusts tax tables annually. If you've had major life changes (marriage, new dependent, second job), update your W-4 at IRS.gov.
Can I reduce my FICA taxes?
No-Social Security and Medicare taxes are mandatory and calculated on all gross wages. However, if you're self-employed, you can deduct the employer portion (7.65%) from your taxable income. High earners can also explore S-corp election strategies, but that's beyond most W-2 employees' scope.
What's the difference between gross and net pay?
Gross pay is your total salary before deductions. Net pay is what you actually receive after federal tax, state tax, FICA, and other deductions are removed. For most people, net pay is 70-85% of gross pay, depending on location and pre-tax elections.