Most people glance at the bottom line on their paystub — the net pay — and move on. But every number above that line tells you something useful: how much you're contributing to retirement, how much goes to each tax, whether your withholding is right, and whether your employer is deducting what they said they would. Reading your paystub takes five minutes and can catch expensive errors.
What changed in 2026
- FICA wage bases adjusted. The Social Security taxable wage base is updated annually; confirm the current year's limit when reviewing your YTD columns.
- HSA and FSA contribution limits increased. Pre-tax contribution limits rise most years — if you're not maximizing these, you may be leaving tax savings on the table.
- Many employers switched to digital paystubs only. Know how to access yours through your HR portal; paper copies may not be available.
- Wage transparency laws expanded in more states, making paystub accuracy easier to verify against job postings and offer letters.
The anatomy of a paystub
Earnings section
| Line |
What it means |
| Regular / Base pay |
Your salary or hourly × hours worked this period |
| Overtime |
Hours above 40/week × 1.5× rate (FLSA) |
| Bonus / Commission |
Taxed as supplemental wages (often at ~22% federal flat rate) |
| Gross pay |
Total before any deductions — the number your taxes are based on |
Pre-tax deductions
These reduce your gross pay before taxes are calculated:
| Deduction |
What it covers |
Tax benefit |
| 401k / 403b contribution |
Your retirement contribution |
Reduces federal + state income tax |
| HSA (Health Savings Account) |
Medical savings if you have HDHP |
Reduces federal income tax + FICA |
| FSA (Flexible Spending Account) |
Medical or dependent care |
Reduces federal income tax + FICA |
| Health insurance premium |
Employer plan — your share |
Reduces federal income tax (usually) |
| Dental / Vision premium |
Your share of employer plan |
Reduces federal income tax |
Pre-tax deductions are the most powerful part of your paystub — each dollar here saves you roughly 22–32% in taxes for a typical earner.
Taxes withheld
| Line |
What it is |
Rate |
| Federal income tax |
Withheld per your W-4 elections |
Varies by income and filing status |
| Social Security |
Part of FICA |
6.2% up to annual wage base |
| Medicare |
Part of FICA |
1.45% (+ 0.9% above ~$200k) |
| State income tax |
Varies by state |
0% to ~13% depending on state |
| Local / city tax |
Some metro areas have these |
Varies |
Your employer pays a matching 6.2% Social Security and 1.45% Medicare — you only see your half on the paystub.
Post-tax deductions
These come out after taxes are calculated:
- Roth 401k contributions (taxed now, grow tax-free)
- Life insurance premiums (over $50k coverage)
- Wage garnishments (child support, student loans)
- Union dues
YTD (Year-to-Date) columns
Every major figure has a YTD column showing the running total since January 1. Use these to:
- Verify your 401k contributions are tracking toward your annual target
- Confirm Social Security withholding stops at the wage base
- Catch double deductions or missed contributions
- Estimate your annual tax situation mid-year
How to catch errors
- Compare gross pay to your salary ÷ pay periods. Biweekly = salary ÷ 26.
- Confirm pre-tax deductions match your enrollment elections.
- Check that your 401k match appears — employer contributions should show, though often in a separate column.
- Watch Social Security stop once YTD wages hit the wage base (~$168k+ in recent years; check current figure).
- Review after any change — raise, new benefits enrollment, change in hours, or updated W-4.
How to pick your W-4 withholding
Your W-4 tells your employer how much federal income tax to withhold. Key points:
- Claiming more allowances (or selecting a higher income on the new W-4 format) = less withholding = potential tax bill in April
- Claiming fewer = more withheld = refund in April
- Getting a large refund isn't a win — it's an interest-free loan to the IRS
- Use the IRS Tax Withholding Estimator at IRS.gov to calibrate
Common mistakes
Never checking the paystub. Employer errors, missed matches, and wrong deduction amounts go unnoticed for months.
Assuming a bonus is taxed differently long-term. Bonuses are taxed at ordinary income rates — the 22% supplemental withholding is just an estimate that gets reconciled at filing.
Confusing employer match with your contribution. Your match doesn't count toward your personal 401k limit — it's extra.
Not updating W-4 after life changes. Marriage, a second job, a new child, or buying a home all change your tax situation.
What to skip
- Maxing a non-deductible traditional IRA when your income phases out the deduction and you have a workplace plan — contribute to the 401k instead.
- Over-withholding "to be safe" — that money could be in a HYSA earning interest all year.
FAQ
Why is my net pay much lower than my salary?
Taxes (federal, state, FICA) plus pre-tax benefits deductions typically reduce take-home to 65–80% of gross pay depending on income and elections.
What does imputed income mean on a paystub?
Income the IRS requires to be reported even if you didn't receive cash — typically life insurance coverage over $50k; it increases your taxable wages.
Why did my federal withholding change when I didn't change my W-4?
Payroll software adjusts withholding calculations when tax tables update, when your YTD income crosses brackets, or when pay frequency changes.
Can I see my employer's matching contribution on my paystub?
Sometimes — many employers list employer match in an "employer contributions" section. If not, check your 401k account directly.
Where to go next