How to Read a Paycheck Stub: Every Line, Decoded

Almost everyone receives a paycheck stub twice a month, and almost no one reads it. The most common reason is not laziness — it is that the stub is genuinely hard to read on the first pass. There are easily thirty line items, mostly in abbreviations, almost all of them prefixed by codes payroll software invented decades ago and nobody bothered to standardize. The good news: the underlying structure is simple, and once you understand the four boxes, the rest is decoding.

This guide walks the structure of a U.S. paycheck stub end-to-end using the 2026 numbers — the brand-new $184,500 Social Security wage base,^[1] the IRS's 2026 federal withholding tables in Publication 15-T,^[2] and the standard deductions and brackets just released in Revenue Procedure 2025-32.^[3] By the end you will be able to look at any stub and answer four questions in under a minute: Is my gross pay right? Are my pre-tax elections correct? Are my taxes in the right ballpark? Is my year-to-date column tracking where it should?

The four-box structure

Every U.S. paycheck stub, regardless of which payroll provider issues it — ADP, Paychex, Gusto, Workday, Paylocity, your employer's in-house system — follows the same four-box logic. Once you see it, you cannot un-see it.

What is left after Box 1 minus Boxes 2, 3, and 4 is your net pay — the actual dollar amount deposited into your checking account or printed on the paper check.

That is the entire formula. The rest of this article is a careful walk through what goes into each term, what 2026 changed, and what to verify on your specific stub.

Gross pay, line by line

The earnings section is usually the easiest to verify because the math is direct. The U.S. Bureau of Labor Statistics' National Compensation Survey reports that median weekly earnings of full-time wage and salary workers were roughly $1,165 in the first quarter of 2025, or about $60,580 annualized^[4] — a useful baseline to compare your own stub against.

Regular pay

If you are paid hourly, regular pay equals your hourly rate times your regular (non-overtime) hours worked. If you are salaried, regular pay equals your annual salary divided by the number of pay periods in a year: 12 for monthly, 24 for semi-monthly (most common in the U.S.), 26 for biweekly, or 52 for weekly. The two most common pay schedules — semi-monthly and biweekly — sound similar but produce different numbers per check. A $90,000 salary on a semi-monthly schedule pays $3,750 per check (24 checks). The same salary on a biweekly schedule pays $3,461.54 per check (26 checks). The annual total is identical; the monthly cash flow is not.

Overtime

Under the Fair Labor Standards Act, non-exempt employees in the U.S. must be paid at one-and-a-half times their regular rate for hours worked above 40 in a single workweek.^[5] Some states (Alaska, California, Colorado, Nevada) have additional daily overtime rules. Overtime should appear as its own line, usually labeled "OT" or "Overtime," with the overtime hours and the overtime rate visible separately. If you worked 47 hours and only see 40 hours at your regular rate with the other 7 hours embedded in the same line, that is a payroll error worth flagging — overtime should always be broken out.

Bonus, commission, and PTO payout

Bonus pay is subject to a special federal withholding treatment. The IRS allows employers to use a flat 22% supplemental withholding rate on bonuses, commission, and other supplemental wages up to $1,000,000 in a calendar year, and 37% above that.^[6] A $5,000 holiday bonus, withheld at 22% federal plus 6.2% Social Security plus 1.45% Medicare plus any state withholding, lands at roughly $3,400 net for most workers. That feels disappointing if you expected your usual marginal rate, but the 22% is a withholding rate, not your final tax rate. If your effective rate is lower, you get the difference back when you file. If it is higher, you owe.

Expense reimbursements

Mileage reimbursed at or below the IRS standard mileage rate, and out-of-pocket expenses submitted through an accountable plan, are not wages. They should appear as a separate earnings line but should not flow into your taxable wages or your YTD gross. If they do, payroll has misclassified them and you will owe tax on what should have been a pass-through.

Pre-tax deductions: where the real savings hide

Pre-tax deductions are the most consequential lines on your paycheck because each one moves the needle on multiple taxes at once. Understanding which deductions reduce which taxes is what separates an informed worker from a worker who quietly overpays the IRS for years.

Traditional 401(k), 403(b), and 457(b)

The 2026 employee deferral limit for 401(k), 403(b), and most 457(b) plans is $24,500, with an additional $7,500 standard catch-up for workers age 50 and older.^[7] The new SECURE 2.0 §109 enhanced catch-up for workers ages 60 through 63 is $11,250 for 2026. Traditional contributions reduce wages used to compute federal income tax but do not reduce Social Security or Medicare wages — your FICA tax is the same whether you defer to a Traditional 401(k) or take the cash.

State-tax treatment of 401(k) contributions follows federal in almost every state, with one notable exception: Pennsylvania taxes the deferral at the state level even though the federal government does not. If your stub shows a state-taxable-wages line that is materially larger than your federal-taxable-wages line, this is usually why.

HSA contributions through payroll

If your HSA contributions are made through payroll (a "Section 125 cafeteria plan" election), they reduce both federal income tax wages and FICA wages — making the HSA the only triple-tax-advantaged account in the U.S. tax code (deductible going in, tax-free growth, tax-free withdrawals for qualified medical expenses). The 2026 HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage, with an additional $1,000 catch-up for workers 55 and older.^[8] If you have an HSA-eligible high-deductible health plan and your employer offers payroll-funded HSA deductions, contributing through payroll rather than depositing into the HSA externally saves you 7.65% of every contributed dollar in FICA tax that you would otherwise pay.

FSA: health, dependent care, commuter

Flexible Spending Accounts come in three flavors, each with its own 2026 limit. The health FSA limit is $3,400 per year; the dependent-care FSA limit is $5,000 per year per household (unchanged since 1986); the commuter benefit limit is $325 per month for transit and $325 for qualified parking.^[9] All three reduce federal income tax wages and FICA wages. The health FSA carries a use-it-or-lose-it rule (subject to a $660 carryover or a 2.5-month grace period if the employer elects); the dependent-care FSA is strict use-it-or-lose-it with no carryover.

Pre-tax health and dental insurance premiums

If your employer's health, dental, or vision premiums are deducted before tax through a Section 125 plan (the default at most employers), they reduce both federal income tax wages and FICA wages. The line label on the stub is usually some flavor of "Medical Pre-tax" or "Cafeteria 125." The savings are nontrivial: a worker in the 22% federal bracket paying $400/month in pre-tax premiums saves roughly $158/month — $88 in federal tax and $30.60 in FICA — versus paying the same premium after tax. That is $1,900/year of cash flow created by a default checkbox most workers never consciously chose.

Federal income tax withholding

This is the line most workers don't really understand. The number is not your actual tax liability — it is your employer's estimate, based on your W-4, of what fraction of your federal income tax you owe each pay period. The reconciliation happens when you file your annual return the following spring.^[10]

How the percentage-method calculation works

The IRS publishes Publication 15-T each year with the withholding tables.^[2] For workers who completed a 2020-or-later W-4 form (everyone hired after January 1, 2020), the employer's calculation is:

1. Annualize the paycheck. Multiply this period's taxable wages (gross minus pre-tax deductions) by the number of pay periods in the year.
2. Subtract the standard deduction implied by your W-4 filing status. The 2026 standard deductions per Rev. Proc. 2025-32 are $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household.^[3]
3. Look up the result in the 2026 percentage-method table for the W-4's filing status to get the annual federal tax.
4. Subtract the credit values from Step 3 of your W-4 (typically $2,000 per qualifying child under 17 plus $500 for other dependents).
5. Divide back down to the period. Divide the annual tax by the number of pay periods.
6. Add any extra withholding from W-4 Step 4(c).

The 2026 single-filer brackets per Rev. Proc. 2025-32 are 10% up to $12,400, 12% to $50,400, 22% to $105,700, 24% to $201,775, 32% to $256,225, 35% to $640,600, and 37% above.^[3] The MFJ brackets are exactly double up to the 32% breakpoint, then narrower above.

The two-earner gotcha

The default W-4 calculation assumes only one job. If you and your spouse both work, both default W-4s separately apply the full standard deduction to each income — meaning your combined household under-withholds by roughly the marginal rate on one standard deduction (often $3,500–$7,000 per year). The fix is W-4 Step 2: either check the box for "two jobs total" (which roughly halves the standard deduction implied by your W-4), or use the IRS Tax Withholding Estimator's recommended additional withholding on Step 4(c) of the higher earner's W-4.^[11] This is the single most common reason households end up owing $3,000 to $8,000 at tax time even though they thought they were withholding correctly.

Bonus withholding

As mentioned in the gross-pay section, supplemental wages — bonuses, commissions, retroactive raises, severance — are usually withheld at a flat 22% federal rate (37% above $1,000,000 per year).^[6] The exception is if your employer aggregates the bonus into your regular paycheck, in which case the full paycheck is withheld at your regular percentage-method rate, which can produce a different (often larger) total withholding on the same dollar.

FICA: Social Security and Medicare

FICA — the Federal Insurance Contributions Act — funds Social Security retirement and disability insurance and Medicare hospital insurance. The taxes appear as two (sometimes three) lines on your stub.

Social Security: 6.2% up to the wage base

You pay 6.2% on every dollar of FICA wages, up to the annual Social Security wage base, then 0% above. Your employer pays a matching 6.2%. The 2026 wage base is $184,500, up from $176,100 in 2025.^[1] The maximum 2026 employee Social Security tax is $184,500 × 6.2% = $11,439.00, which is the most you can possibly pay in Social Security tax this year from any single employer.

If you switch jobs mid-year, each employer applies the wage base independently. A worker who earns $120,000 at Employer A from January to June, then $120,000 at Employer B from July to December, pays Social Security on the full $240,000 because each employer's withholding system is reset to zero. The excess (above $11,439) is recovered as a credit when you file your federal tax return — it appears on Schedule 3 as "excess social security tax withheld."^[12]

Medicare: 1.45% on everything, plus 0.9% above $200K

You pay 1.45% on every dollar of FICA wages, with no cap. Your employer pays a matching 1.45%. Additionally, once your YTD wages from a single employer cross $200,000, that employer must begin withholding an extra 0.9% Additional Medicare Tax on every dollar above the threshold.^[13] Your employer does not match the additional 0.9%.

The statutory thresholds for the 0.9% Additional Medicare Tax are $200,000 single, $250,000 married filing jointly, and $125,000 married filing separately. But employers do not know your filing status or your spouse's income — they apply the $200,000 single threshold regardless. This produces three classic mismatches:

• MFJ household, one high earner above $200K but household total below $250K. Employer withholds the 0.9% on wages above $200K; you reconcile and get the over-withholding back when you file Form 8959.^[13]
• MFJ household, two earners above $125K each but neither above $200K. No employer withholds the 0.9%, but you owe it on combined wages above $250K. You pay at filing time, often as a surprise.
• Single earner above $200K from multiple employers, each below $200K individually. No employer withholds; you owe on combined wages above $200K.

State, local, and disability taxes

Forty-one states impose a state income tax that flows through your paycheck. The remaining nine — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming — do not.^[14] If your stub shows a state income tax withholding line and you live in one of the nine no-tax states, that is an error worth a payroll ticket today.

State income tax: flat vs. progressive

State income tax rates fall into two general families. Eleven states use a flat-rate structure (Arizona 2.5%, Colorado 4.4%, Illinois 4.95%, Indiana 3.0%, Kentucky 4.0%, Michigan 4.25%, Mississippi 4.4% above the $10,000 exemption, North Carolina 4.25% for tax year 2025, Pennsylvania 3.07%, Utah 4.5%) — your state withholding is roughly (taxable wages × the flat rate), period.^[15] The remaining thirty states (and D.C.) use progressive brackets with rates ranging from California's top 13.3% to New York's 10.9% to lower-tax progressive states like North Dakota that top out at 2.5%.

Most progressive states use a separate state W-4 (e.g., New York IT-2104, California DE 4) that mirrors but does not perfectly match the federal W-4. If your federal withholding looks correct but your state withholding looks too high or too low, the usual cause is that you completed only the federal W-4 and not the state one — payroll fell back to a default the state requires.

Local income tax

Around 5,000 cities and counties in 17 states levy a local income tax that appears as its own line on the stub. The biggest are New York City (up to 3.876%), Philadelphia (3.75% resident / 3.44% non-resident wage tax), and the Ohio municipalities (typically 1.5%–2.5%). If you work in one jurisdiction and live in another, the cross-jurisdiction rules can be complex — Philadelphia, for example, charges its full resident rate on residents wherever they work, and its non-resident rate on non-residents who work within city limits.

State disability and family leave

A handful of states impose mandatory disability or paid family leave contributions that look like FICA but show up on a separate line. The notable examples: California State Disability Insurance (SDI) at 1.1% in 2025 with no wage cap; New Jersey TDI and FLI at low single-digit percentages; New York PFL at 0.388% capped; Hawaii TDI; Rhode Island TDI; Washington Paid Family and Medical Leave at 1.0% combined employee + employer; Massachusetts PFML at 0.88%.^[16] These are usually small but they should not be invisible — verify the rate is the current statutory rate and not last year's.

Post-tax deductions

The post-tax block on a paycheck stub typically contains a small number of items, but each one has tax consequences worth knowing.

Roth 401(k) contributions

Roth 401(k) contributions are taken from after-tax pay, so they do not reduce your federal taxable wages this year. The trade is that qualified distributions in retirement (age 59½ and at least 5 years from the first Roth contribution) come out entirely tax-free. For workers under 30 who are likely to be in higher tax brackets later in their careers, Roth contributions usually win on lifetime tax math. For workers in their peak earning years already at 24% or above, Traditional usually wins. See the Roth-vs-Traditional decision rule for the precise math.

Group term life insurance over $50,000

Section 79 of the Internal Revenue Code excludes the cost of the first $50,000 of employer-paid group term life insurance from your taxable income. Above $50,000, the imputed cost of the coverage (using IRS Table I rates by age) gets added to your taxable wages as a non-cash benefit. On the stub this often appears as "Imputed Income" or "GTL" with a small dollar figure that increases your gross taxable wages but is not paid in cash — and is then matched with a small "Group Life over 50K" deduction line.^[17] Workers under 50 often see only a few dollars per pay period; workers in their 60s with high coverage levels can see materially more.

Garnishments and child support

If you have a court order for child support, alimony, or a creditor garnishment, the amount comes out after tax. Federal law caps the percentage of disposable earnings that can be garnished — generally 50%–65% for child support and 25% for ordinary creditor garnishments — and your state may impose tighter limits.^[18] The line label is usually some flavor of "Garnishment," "Levy," or "Support Order."

HSA contributions outside payroll

A subtle one. If you contribute to your HSA outside payroll (e.g., direct from your bank account), the contribution does not appear on your paycheck stub at all. You take the deduction "above the line" on Schedule 1 of your 1040. The downside: you do not capture the 7.65% FICA savings you would get from a payroll-funded election. If your employer offers a payroll HSA option, almost always take it.

YTD: the column most workers ignore

Most paycheck stubs show every line item in two columns: this pay period only, and year-to-date through this paycheck. The YTD column is where almost all errors get caught — because a single error doubles or compounds over the year, and YTD makes that visible.

Three YTD checks worth doing every quarter:

1. YTD gross divided by pay periods elapsed should equal gross per period. If it doesn't, you had a non-standard paycheck — bonus, retroactive raise, paid-time-off cash out — that should be visible elsewhere on the stub.
2. YTD Social Security wages should equal YTD gross minus YTD pre-tax deductions that reduce FICA (HSA, FSA, pre-tax health premiums, dependent care). It should not include the YTD 401(k) deferral subtraction (since 401(k) does not reduce FICA wages). Once YTD Social Security wages cross $184,500, the SS withholding line should go to zero for the rest of the calendar year.^[1]
3. YTD federal income tax withholding should track within 5% of the IRS Tax Withholding Estimator's projection for your full-year income and filing situation.^[11] If you are dramatically over- or under-withholding by mid-year, update your W-4 to fix it before the rest of the year compounds the error.

Three worked examples

Case 1 — Maya, $52,000 salary, single, no pre-tax deductions

Setup: Maya is 26, single, no dependents, lives in Texas (no state income tax), earns a $52,000 salary paid semi-monthly (24 checks). She enrolled in employer health insurance ($120/check pre-tax) but is not yet contributing to the 401(k).

Per-paycheck math:

What Maya should verify on her stub: The pre-tax health premium reduced both her federal and FICA wages (not just federal). Her YTD Social Security wages and YTD Medicare wages should be identical to each other for the year. She should plug $52,000 into the IRS Tax Withholding Estimator to confirm her annual withholding will land within $200 of her actual tax bill; if not, she can adjust W-4 Step 4 to true up.

Case 2 — David and Priya, $148,000 combined, MFJ, two-earner mismatch

Setup: David earns $92,000 in Illinois. Priya earns $56,000 in Illinois. Both filed default 2020-or-later W-4s marked "Married filing jointly" with no W-4 Step 2 adjustment. David contributes 6% of his pay ($5,520/year) to a Traditional 401(k); Priya contributes 4% ($2,240/year). Both pay $180/biweekly for family health insurance pre-tax, deducted from David's check.

The problem: Each W-4 separately applies the $32,200 MFJ standard deduction to that worker's income. Together they over-subtract by $32,200 — equivalent to roughly $7,000 of under-withheld tax at their combined 22% bracket.

What appears on the stubs: Each individual paycheck looks fine. David's net pay is about $2,650 per biweekly check; Priya's about $1,720. YTD federal withholding combined runs about $13,500 against a combined federal tax liability of about $20,500. They file in April expecting a refund and are surprised by a $7,000 bill plus a small underpayment penalty.

The fix: Either (a) the higher earner checks the W-4 Step 2(c) "Multiple Jobs Worksheet" box, which halves the implied standard deduction on that paycheck and roughly doubles federal withholding, or (b) the IRS Tax Withholding Estimator recommends a specific dollar amount of extra withholding on Step 4(c) of David's W-4. Both fix the math. The Step 4(c) approach is more precise; the Step 2 checkbox is faster.

Lesson: Two-earner households should run the IRS Tax Withholding Estimator the day they receive a new pay stub at a new salary, every time. This is the single most common reason MFJ households arrive at tax time with a four- or five-figure surprise bill.^[11]

Case 3 — Elena, $215,000 salary, single, max 401(k) and HSA, California

Setup: Elena is 38, single, lives in California, $215,000 base salary paid biweekly (26 checks). She contributes the full $24,500 to her Traditional 401(k); she has an HDHP and contributes $4,400 to an HSA through payroll; she has $400/biweekly in pre-tax health insurance ($10,400/year). She is on track to cross the $200,000 Additional Medicare Tax threshold around October.

Per-paycheck math (representative — September 2026):

What Elena should verify: Her YTD Social Security tax line should stop accumulating once YTD FICA wages cross $184,500 — somewhere in early November. If it keeps accumulating past that point, payroll's wage-base ceiling is misconfigured and she will need to claim the excess as a Schedule 3 credit. Her additional 0.9% Medicare withholding should start the pay period after her YTD wages cross $200,000, not at the beginning of the year. The HSA savings vs. funding the same $4,400 externally is $4,400 × 7.65% = $336.60 in extra FICA tax saved — a real cash flow created by choosing the payroll deduction option.

Six errors to look for every payday

Payroll software is usually right but does have specific failure modes that show up on the stub. The six worth checking:

1. Wrong filing status from a stale W-4. If you got married, divorced, or had a child and never updated your W-4, your withholding has been wrong since the date of the life event. Update Step 1(c) and Step 3 (dependents) and submit a fresh W-4 today.
2. Social Security withholding continuing past the wage base. Once YTD FICA wages exceed $184,500 in 2026, the SS line should be zero for the rest of the year. Spot-check the November and December stubs of anyone earning $200K+ annually.
3. Pre-tax deductions stuck at last year's election. If you raised your 401(k) percentage during open enrollment and the next January's paycheck still deducts the old percentage, payroll missed the change. Catch this on the first paycheck of the new plan year.
4. State tax for a state you no longer live in. If you moved mid-year and HR did not update your state of residence, your old state continues to withhold and your new state under-withholds. You will end up filing two part-year state returns to recover.
5. Overtime calculated on the wrong base rate. Overtime should be 1.5× your regular rate of pay, which under FLSA includes most non-discretionary bonuses, shift differentials, and certain incentive pay — not just your base hourly rate.^[5] Workers who receive shift differentials or production bonuses are commonly under-paid overtime when payroll uses the base rate only.
6. Reimbursements showing up as taxable wages. Mileage at the IRS rate, business meals, and other expenses submitted through an accountable plan should pass through tax-free. If they appear in your Box 1 wages on the year-end W-2, payroll misclassified them and you can request a corrected W-2 (Form W-2c).

Eight-item paycheck checklist

Spend ten minutes the next time you receive a stub:

1. Confirm gross pay = (regular hours × rate) + overtime + bonus + commission, and that overtime and bonuses are on their own lines.
2. Verify every pre-tax deduction matches your benefits-portal elections (401(k) %, HSA contribution, FSA amount, insurance premium).
3. Confirm pre-tax health and HSA deductions are reducing both federal and FICA wages on the stub.
4. Run your annual gross through the IRS Tax Withholding Estimator and confirm your YTD federal withholding tracks within 5% of the projection.
5. If you are in a two-earner household, check W-4 Step 2 on the higher earner's form; default W-4s under-withhold MFJ households by $3K–$8K/year.
6. Verify state withholding matches your state of residence (or work state, depending on which is your tax home), and verify any state disability or family leave line matches the current statutory rate.
7. Confirm Social Security withholding stops the moment YTD FICA wages cross $184,500 (2026).
8. Save every stub for three years; reconcile December YTD against the January W-2; flag any discrepancy with payroll within 30 days of receiving the W-2.

Frequently asked questions