Legal Guide

Tips for Reading a Pay Stub

Today, more and more workers opt to have their paycheck deposited directly in their bank account. While this offers a convenient way to get paid and have the money available immediately, it’s still important to understand what everything means on the pay stub given by their employer.

If a worker fails to review the information on their paycheck, they may actually lose money. Unfortunately, this isn’t always an accident, which illustrates why understanding all the information on a pay stub is so important.

Keep reading for a brief overview of some information found on the typical pay stub.

The Basic Parts of a Pay Stub

In most cases, a person’s pay stub lists some basic information. While this may vary from employer to employer, there are certain things a person can count on seeing.

This includes taxable earnings, gross pay, net pay, paycheck deductions, and other benefits. Learning more about some of these can help a person see why this matter and why they should keep track of the numbers on their paycheck stubs.

Federal Income Taxes

The federal government always takes their piece of the pie when it comes to earned wages. This is depicted on a pay stub as the withholding tax. It’s a partial payment of the annual income taxes sent to the government.

The total amount of money that’s withheld for federal taxes depends on several factors. These factors include the amount earned and the information given to the employer on a person’s W-4 form, or the Employee’s Withholding Allowance Certificate.

On the W-4 form, a person can dictate allowances for themselves, for their dependents or their spouse. However, for each allowance that’s taken less money is withheld for federal taxes and more money is paid out through the paycheck.

If a person opts to take fewer allowances, then a larger amount of money is withheld to pay federal taxes.

State Taxes

Based on where a person lives, they may or may not have to pay state income tax. Just like with federal taxes, money for state taxes is taken out of every paycheck, which is always reflected on the pay stub.

Social Security

Every working person in the U.S. is required to contribute a part of their paycheck to Social Security. The percentage varies each year, but it’s another deduction that’s clearly outlined on a pay stub.


In addition to the deductions mentioned above, the government also requires Americans to contribute to the Medicare program. This is the U.S. provided government insurance plan that offers medical, surgical, and hospital benefits for people over the age of 65.

It’s important to note, it isn’t just employees who contribute to Medicare. Employers must also pay into this system on behalf of each employee they have.


Many employers provide their workers with insurance. If an employee opts into this program, their paycheck reflects the costs every month.

Uncovering the Mystery of the Pay Stubs

When an employee fully understands the pay stub they receive, they can feel confident they receive the pay deserved. It’s a good idea to review the pay stub each week to look for any mistakes and ensure they get addressed right away. Keeping this in mind when a pay stub is received can minimize issues now and in the future.

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