A pay stub is the receipt for your paycheck, and reading it comes down to one idea: gross pay is what you earned, net pay is what actually lands in your account, and everything between the two is taxes and deductions. Once you can tell which deductions are taxes withheld for you and which are choices you made, the whole document makes sense. This is general explanation, not tax advice — the exact taxes and rules depend on where you live and work, so verify your specifics.
The four sections of a pay stub
Most stubs, paper or digital, are organized the same way. Find these four blocks and the rest follows.
| Section |
What it shows |
| Earnings |
Gross pay this period — hours times rate, salary, plus any overtime or bonus |
| Taxes |
Amounts withheld for income tax and payroll taxes |
| Deductions |
Benefits, retirement, and other items taken from pay |
| Net pay and YTD |
What you take home, plus year-to-date running totals |
Gross pay vs net pay
Gross pay is your total earnings before anything is taken out. Net pay, sometimes labeled "take-home", is what remains after taxes and deductions. The difference can be large, which surprises people who expect their salary divided by pay periods. If the gap looks off, the breakdown below shows where the money went. The wider concepts are covered in what is gross income and what is net income.
Taxes vs deductions
This is the distinction that confuses people most. They are not the same kind of subtraction.
- Taxes withheld are sent to the government on your behalf — income tax and payroll taxes. The amount depends on your earnings and the filing details you gave your employer.
- Pre-tax deductions come out before tax is calculated, like many retirement and health-insurance contributions, which lowers your taxable income.
- Post-tax deductions come out after tax, such as certain insurance or wage garnishments.
- Year-to-date (YTD) columns add up each line across the year, which is how you confirm your withholding and contributions are on track.
The practical point: taxes are largely set by rules, but many deductions are choices. Your retirement contribution percentage, for example, is usually yours to change.
What to check every pay period
- Hours and rate. Confirm they match what you worked, especially with overtime.
- Filing status and allowances. A wrong setting here changes your tax withholding all year.
- Retirement contribution. Make sure it reflects the percentage you intended; this is the line that quietly builds wealth.
- New or missing deductions. A benefit you did not sign up for, or a missing one you did, is easiest to catch now.
Catching an error on this check beats discovering it at tax time.
What to skip
- Treating deductions as untouchable. Many, especially retirement, are adjustable and worth reviewing.
- Ignoring the YTD columns. They are the quickest sanity check that the year is adding up.
- Panicking at the gross-to-net gap. It is normal; the breakdown explains every dollar.
FAQ
Why is my net pay so much lower than my salary?
Taxes and deductions sit between gross and net pay. Income and payroll taxes plus any benefit and retirement contributions can add up to a meaningful share of gross pay.
What does YTD mean on a pay stub?
Year-to-date. It is the running total of that line from the start of the year, useful for confirming withholding and contributions are on track.
Are all deductions required?
No. Taxes are mandatory withholding, but many deductions like retirement and optional benefits are choices you can adjust.
What should I do if my pay stub looks wrong?
Check the hours, rate, and filing status first, then contact your payroll or HR department promptly. Errors are easiest to correct on the next cycle.
Where to go next
For related reading see What is gross income in 2026, What is net income in 2026, and How to lower your taxes in 2026.