How To Read Your Pay Stub (And What Changes You Can Make to It)

You’ve seen your pay stub hundreds of times by now, but no matter how familiar you think you might be with it, there’s a chance you don’t know all the intricacies. This is especially true if you’ve just been paid for the first time at a new gig.

Your pay stub can look a little overwhelming. The Fair Labor Standards Act says employers need to maintain records of employees' work hours and wages. However, it doesn't require employers to provide this information to their employees (though some states have different laws).

To help you make the most of your paycheck, we created a simple guide for reading your pay stub and shared what changes you can make to better suit your needs.

Your paystub is divided up into specific sections: personal and check information, earnings, deductions, and withholdings.

Broadly speaking: Personal and check information will have things like your address and what pay cycle you’re in. True to its name, the earnings section shows you how much you’ve made. Deductions show the amount in taxes being taken out.

This is pretty self-explanatory. This is all about you, the employee.

The section has basic info, like your name and address, and potentially more sensitive information, such as your Social Security number, employee ID, and filing status. It’s usually next to the check info panel, which includes the pay period and date.

In a nutshell, your gross income shows how much you’ve earned for that pay period before anything was taken out.

If you’re a salaried employee, there shouldn’t be any real surprises here — it’ll be your yearly salary divided by how many paychecks you get yearly.

Hourly employees have more to look for, including the amount of time worked, which can vary. Any bonuses or overtime are also listed.

YTD stands for “Year to Date” — it shows how much you’ve earned so far that calendar year.

As with gross income, this is your total pay before any deductions.

This is where you’ll start to see your hard-earned money drained from your pay stub. That’s right, this is where all those taxes come in.

First up are federal taxes. The IRS withholds these from paychecks, and yes, everyone has to pay them.

Your withholding depends on your filing status, income, and dependents you filled ut on on your W-4 form.

If you feel like the withholdings are too much or not enough, submit a new W-4 to adjust the withholding. You can reduce taxable income by contributing to a 401(k), health insurance, or a health savings/flexible spending account.

Just be aware that it can dramatically impact your tax return the following year.

FICA stands for Federal Insurance Contributions Act. This is the tax that puts money in the coffers of Social Security and Medicare — which helps some 180 million Americans.

On your pay stub, these might appear as one entry (FICA) or as separate line items (FICA SS TAX and FICA MEDICARE).

In total, 7.65% of your income goes to these programs. That’s 6.2% for Social Security and 1.45% for Medicare. Your boss makes up the other half to hit 15.3%.

Not every state collects income tax — Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, Washington, and Wyoming don’t — but don’t be shocked to see a state tax line on your pay stub.

New Hampshire is another special case since it collects income from dividends and interest.

Some cities, like New York, also collect income tax.

You might come across a smattering of other deductions on your pay stub. Chief among them are pretax deductions for any benefits you get through your employer. That includes any premiums for health, dental, and vision insurance.

Another common one is deductions for your retirement plan, like a 401(k) or a 403(b). Health Savings Account and Flexible Savings Account contributions also get deducted pretax. These contributions can all be adjusted.

Depending on your situation, there may be other deductions, including child support payments, wage garnishments, and tax levies.

Congratulations, you’ve made it to the most alluring part of the pay stub: how much you get to take home at the end of the week (or, however often your employer cuts a check).

Your net income is your gross income post-deductions. Depending on your many deductions, this could look significantly smaller than your gross income.

Similarly, your YTD net income is your take home so far.

Now that you’ve got that sweet, sweet net income, maybe it’s time for a little vacation?

Many pay stubs (and their digital equivalent, if you use ADP online, for example) will show you how much time off you’ve accrued and how much is left for the year. The same goes for sick pay.

How that time off is calculated, or how much you start the year with, varies from position to position and company by company.

Your pay stub provides an intimate view of how much gets deposited into your bank account every pay period. It can also tell you why a particular amount is yours to keep.

Digging through all of the lines on a pay stub might seem arcane, but knowing where your earnings are going is critically important. It’s one of the best ways to boost your finances and set yourself up for success.