Pay Stub

A document accompanying each paycheck that itemizes your gross pay, deductions, taxes withheld, and net take-home pay.

A pay stub (also called an earnings statement or paycheck stub) is a record of your compensation for a specific pay period. It shows gross earnings (your total pay before deductions), all deductions taken out (taxes, health insurance premiums, 401(k) contributions, garnishments), and net pay — the amount actually deposited or paid to you. Most employers provide pay stubs electronically through payroll portals.

Pay stubs are important documents to review and retain. They're required for rental applications, mortgage underwriting, loan applications, and resolving payroll disputes. Discrepancies between your pay stub and your offer letter or expectations — wrong withholding, missing reimbursements, incorrect deduction amounts — are worth catching early. Many states legally require employers to provide pay stubs; requirements vary on format and delivery method.

Errors on pay stubs are more common than most employees expect. The most frequent problems: incorrect overtime calculations, 401(k) contribution amounts that don't match your elected percentage, benefits deductions that continue after coverage changes, and bonus or commission amounts that don't match approved figures. Reviewing your pay stub on the first check of a new job and after any benefit change is a reliable way to catch these errors before they compound across multiple pay periods.

The year-to-date (YTD) column on your pay stub is the most underused part of the document. It shows running totals for every line item since January 1 — making it a precise tax planning tool. Midyear, compare your YTD federal tax withheld against your estimated annual tax liability. If you're on track to significantly over-withhold (a common result of starting a new job mid-year), you can update your W-4 to reduce withholding and increase take-home now rather than waiting for a large refund. Conversely, significant under-withholding may mean you owe a penalty at filing.

Key Line Items to Understand

  • Gross pay: total earnings before any deductions — base salary, overtime, bonuses for the period.
  • Federal/state income tax withheld: based on your W-4 elections; not necessarily your actual tax liability for the year.
  • FICA: Social Security (6.2% up to the annual wage base) and Medicare (1.45%) — both employee and employer pay half.
  • Pre-tax deductions: 401(k), health/dental/vision premiums, FSA/HSA contributions — these reduce your taxable income.
  • Post-tax deductions: Roth 401(k) contributions, some supplemental insurance — these don't reduce taxable income.
  • YTD (year-to-date): running totals for each line item since January 1 — use it for tax planning.

What to Check Every Time

  • First check at a new job: verify gross pay matches offer letter, benefit deductions match elections, and 401(k) contribution percentage is correct.
  • After open enrollment: confirm old benefit deductions stopped and new ones started correctly.
  • After a raise or promotion: verify the new rate is reflected starting from the correct pay period.
  • Bonus or commission pays: verify the gross amount matches approved figures before deductions are applied.
  • Garnishments: if you have a wage garnishment, verify the amount complies with legal limits — employers can over-withhold.

Example

An employee earning $5,000/month sees her pay stub showing: gross pay $5,000; federal tax withheld $620; state tax $200; Social Security $310; Medicare $73; health insurance premium $180; 401(k) contribution $250. Net pay: $3,367. She notices her 401(k) contribution is $250 but her election was 6% of gross ($300) — she contacts payroll and discovers a data entry error that has been shortchanging her retirement contribution for two months.