Reading a pay stub, line by line

The situation

Your first pay stub looks like a tax form had a baby with a spreadsheet. Acronyms, two columns of numbers, a “YTD” you’ve never heard of. But a pay stub is actually one of the most honest documents you own: it shows exactly where every dollar of your pay went. Once you can read it, you can spot a mistake — and payroll mistakes do happen.

The idea

Every stub, no matter the employer, has the same three-part shape:

1. Gross pay (top) — what you earned this period, before anything comes out.
2. Deductions (middle) — taxes and benefits subtracted. The usual suspects:
   • Social Security / OASDI and Medicare — your FICA (7.65% total).
   • Federal income tax — set by your W-4 (next-but-one lesson).
   • State income tax — varies by state; some states have none.
   • Benefits — health insurance, a 401(k) contribution, HSA/FSA, often taken pre-tax.
3. Net pay (bottom) — take-home, what hits your bank.

Most stubs show two columns: this period and YTD (year-to-date, the running total since January 1). The rule that always holds: gross − deductions = net. If it doesn’t tie out, something’s wrong and it’s worth a question to HR.

By the numbers

Here’s the anchor stub — $48,000 a year, biweekly, one pay period:

Line	Amount
Gross pay	$1,846.15
− Social Security (6.2%)	−$114.46
− Medicare (1.45%)	−$26.77
− Federal income tax (illustrative)	−$137.69
− State income tax (varies)	−$0 to −$80+
Net pay (no state tax)	≈ $1,567

The federal income-tax line is illustrative — your real number depends on what you put on your W-4. But FICA is fixed: those two lines should always be about 7.65% of gross, every check.

If you’re paid hourly

Salaried people see a flat gross; hourly people see the math. Say you earn $20/hour, 40 hours/week, paid biweekly (80 hours a period):

Line	Amount
80 hours × $20	$1,600.00
− Social Security (6.2%)	−$99.20
− Medicare (1.45%)	−$23.20
Subtotal after FICA	$1,477.60

That’s $20 × 40 × 52 = $41,600 a year before income tax. Same stub structure, just hours × rate at the top — and the same 7.65% FICA rule underneath. Overtime, a missed hour, or a wrong rate all show up here first, which is exactly why it pays to read it.

The habit

You don’t need to audit every stub forever. But read the first one from any new job closely, then glance at the FICA line each period — if it’s ever not ~7.65% of gross, or your net suddenly changes for no reason, that’s your cue to ask. A two-minute check beats discovering a months-old payroll error at tax time.