How to Read Your Paycheck Stub (Every Line Explained)

Your first paycheck is always a slap in the face.

You did the math in your head during the interview. $75,000 a year divided by 24 pay periods. That's $3,125 every two weeks. Nice. You can work with that.

Then the direct deposit hits. $2,284.62. You stare at it. You check again. You open the pay stub and see 14 line items you've never been taught to read. Federal withholding. FICA-OASDI. State disability insurance. Something called "imputed income."

Where did $840 go? Nobody teaches this in school and it shows.

This guide walks through every single line on a typical paycheck stub. Real numbers. Actual 2026 tax rates. And three mistakes that might be costing you money right now without you knowing.

Gross Pay vs. Net Pay: The Gap That Shocks Everyone

Two numbers matter on your pay stub. Gross pay is the big, exciting number — your salary before anything gets taken out. Net pay is the smaller, depressing number — what actually lands in your checking account.

The gap between them? For most W-2 employees, it's 25% to 35% of gross pay. On a $75,000 salary, that means $18,750 to $26,250 per year vanishes before you touch it. Gone. Split between the federal government, your state government, Social Security, Medicare, and whatever benefits you signed up for during that overwhelming onboarding day.

Your gross pay section usually shows a few sub-items:

• Regular pay — your base salary divided by pay periods
• Overtime — 1.5x your hourly rate for hours beyond 40/week (if non-exempt)
• Bonus/commission — often taxed at a flat 22% federal supplemental rate
• PTO payout — unused vacation paid out, fully taxable

The gross number is what your employer agreed to pay you. The net number is what the government and insurance companies agreed to let you keep.

Federal Income Tax: Why Your Coworker Pays Way More

This is usually the biggest bite. Federal income tax is progressive, meaning different chunks of your income get taxed at different rates. You don't pay one flat rate on everything — a common misconception that causes real confusion.

Here are the 2026 federal income tax brackets for a single filer:

• 10% on the first $11,925
• 12% on $11,926 to $48,475
• 22% on $48,476 to $103,350
• 24% on $103,351 to $197,300
• 32% on $197,301 to $250,525
• 35% on $250,526 to $626,350
• 37% on everything above $626,350

So a single filer earning $75,000 with the 2026 standard deduction of $15,000 has a taxable income of $60,000. Their federal tax bill breaks down like this: 10% on the first $11,925 ($1,192.50), then 12% on the next $36,549 ($4,385.88), then 22% on the remaining $11,526 ($2,535.72). Total: about $8,114 per year, or roughly $338 per biweekly paycheck.

That's an effective rate of around 10.8%. Not 22%, even though that's the marginal bracket. This distinction matters. A lot.

Here's why your coworker earning $85,000 pays noticeably more: their extra $10,000 in income (after deductions) gets taxed at 22%, adding roughly $2,200 more in federal tax. The system is designed this way. It's not a bug.

What shows on your stub: You'll see a line labeled "Federal Withholding" or "FIT." The amount depends on your W-4 selections — filing status, dependents, and any extra withholding you requested. If this number looks wrong, your W-4 is probably outdated.

FICA: The Tax Nobody Talks About

FICA stands for the Federal Insurance Contributions Act. Fancy name. Simple concept: it funds Social Security and Medicare. And your employer won't explain this to you because they're paying an identical amount on top of your salary.

Two pieces:

• Social Security (OASDI): 6.2% of your gross pay, capped at $176,100 in 2026. Once you earn past that threshold in a calendar year, this deduction drops to zero. High earners notice this around October or November when their paychecks suddenly get bigger. Your employer pays another 6.2% — you never see that on your stub.
• Medicare (HI): 1.45% of all gross pay, with no cap. If you earn above $200,000 as a single filer, an Additional Medicare Tax of 0.9% kicks in on everything above that threshold.

Combined, FICA takes 7.65% off the top of every paycheck for most workers. On a $75,000 salary, that's $5,737.50 per year — roughly $239 per biweekly check. It'll show up as two separate lines: "OASDI" or "SS" for Social Security, and "Medicare" or "MED."

The frustrating part? You won't collect Social Security retirement benefits until age 67 for anyone born after 1960. That's decades of payments before you see a dime back. Whether the fund will still be solvent by then is a separate anxiety-inducing conversation. But the deduction is non-negotiable — every W-2 employee pays it, no exceptions.

State and Local Taxes: The Wild Card

This is where paychecks in different states look radically different. State income tax ranges from literally nothing to a painful 13.3%.

Nine states charge zero state income tax: Alaska, Florida, Nevada, New Hampshire (dividends/interest only until 2027), South Dakota, Tennessee, Texas, Washington, and Wyoming. If you live in one of these, congratulations — you get to skip this section.

Everyone else? Here's what the damage looks like in high-tax states:

• California: up to 13.3% (highest in the nation)
• Hawaii: up to 11%
• New Jersey: up to 10.75%
• Oregon: up to 9.9%
• Minnesota: up to 9.85%

On your stub, look for "SIT" (State Income Tax) or your state's abbreviation. Some states also have disability insurance (SDI) or paid family leave deductions — California, New Jersey, New York, and a few others take an additional 0.5% to 1.1% for these programs.

And then there are local taxes. Live in New York City? That's an extra 3.078% to 3.876% on top of the state rate. Work in some Ohio cities? Local income tax can hit 2.5%. These show up as "Local Tax" or the city/county name.

I genuinely believe state and local taxes are the most underrated factor in take-home pay. The difference between working in Austin, Texas versus San Francisco, California on the same $100,000 salary is over $8,000 a year in state and local taxes alone. That's a real number that affects your life.

Pre-Tax Deductions That Save You Money

Now we get to the deductions you actually chose. And these are the ones most people don't optimize because they filled out forms during a chaotic first week and never looked at them again.

Pre-tax deductions reduce your taxable income. That means every dollar you put into these accounts saves you money at your marginal tax rate. If you're in the 22% bracket, a $100 pre-tax deduction only "costs" you $78 in take-home pay.

401(k) / 403(b) Traditional Contributions

The 2026 contribution limit is $23,500 ($31,000 if you're 50 or older). Every dollar goes in before federal and state income tax. On a $75,000 salary, contributing 10% ($7,500/year) could save you roughly $1,650 in federal tax alone. Your stub shows this as "401K" or "Ret" or your plan provider's name.

If your employer matches contributions — say 50% up to 6% of salary — and you're not contributing at least 6%, you are setting money on fire. That's the strongest financial opinion I hold and I won't apologize for it.

Health Insurance Premiums

Most employer-sponsored health plans deduct premiums pre-tax under a Section 125 cafeteria plan. The average employee contribution in 2025 was $1,368/year for single coverage and $6,576 for family coverage, according to KFF. Check your stub for "Medical," "Dental," "Vision" — each may be a separate line item.

Health Savings Account (HSA)

Available only with a high-deductible health plan (HDHP). The 2026 limit is $4,300 for self-only coverage and $8,550 for family. HSA contributions are triple-tax-advantaged: pre-tax going in, tax-free growth, tax-free withdrawals for medical expenses. This is the best tax shelter available to most Americans. Don't sleep on it.

Flexible Spending Account (FSA)

Similar idea, but with a use-it-or-lose-it rule (up to $640 can roll over in 2026). The limit is $3,300. Good for predictable expenses like glasses, prescriptions, or that dental work you keep putting off.

Commuter Benefits

Up to $325/month pre-tax for transit passes or qualified parking. Adds up to $3,900/year in tax-free commuting costs if you max it out.

Post-Tax Deductions: What Comes Out After Tax

These deductions hit your paycheck after taxes have been calculated. They don't reduce your taxable income — they just reduce what you take home.

• Roth 401(k): Contributions are post-tax, but withdrawals in retirement are tax-free. Same $23,500 limit as traditional 401(k). Whether Roth or traditional is better depends on whether you think your tax rate will be higher or lower in retirement. Nobody knows for sure. Pick one and contribute consistently — that matters more than the Roth-vs-traditional debate.
• Life insurance (excess): Employer-provided group life insurance above $50,000 in coverage creates taxable "imputed income." You'll see a small amount added to gross pay and then deducted. Confusing? Yes. It's a tax technicality. The IRS requires it.
• Disability insurance: Short-term and long-term disability premiums, if you pay them post-tax, mean benefits are tax-free if you ever need them. Small detail. Huge difference if you actually get injured.
• Union dues: If applicable, typically 1% to 2.5% of gross pay.
• Wage garnishments: Court-ordered deductions for child support, student loan defaults, or unpaid taxes. These are mandatory and capped at 25% to 50% of disposable earnings depending on the type.

A Real Paycheck Breakdown: $75,000 Salary

Enough theory. Here's what a biweekly paycheck actually looks like for a single filer in a state with 5% income tax, contributing 6% to a traditional 401(k) with employer-sponsored health insurance.

Gross pay (biweekly): $2,884.62

Pre-tax deductions:

• 401(k) at 6%: −$173.08
• Health insurance (single): −$57.00
• HSA contribution: −$83.33

Taxable gross: $2,571.21

Tax withholdings:

• Federal income tax: −$282.15
• Social Security (6.2%): −$178.85
• Medicare (1.45%): −$41.83
• State income tax (5%): −$128.56

Post-tax deductions:

• Dental insurance: −$12.50
• Vision insurance: −$5.80

Net pay: $1,921.52

That's $963.10 gone per paycheck. From a $75,000 salary, you take home approximately $49,960 per year — roughly 66.6% of your gross. If you live in California instead of a 5%-tax state, knock off another $100+ per paycheck.

Stare at those numbers. Get comfortable with them. This is reality for most salaried workers in America. The sooner you understand where every dollar goes, the sooner you can make intentional choices about the parts you control — like retirement contributions and benefit elections.

3 Mistakes to Check For (Right Now)

Payroll errors are more common than people realize. The American Payroll Association estimates that error rates on paychecks run between 1% and 8% of total payroll. On a $75,000 salary, even a 1% error is $750 a year.

1. Wrong Filing Status on Your W-4

If your W-4 says "Single" but you're married filing jointly, you're likely overwithholding by hundreds of dollars per year. The IRS isn't going to call you and say "hey, we owe you money." You'll wait until April to get it back as a refund — an interest-free loan to the government. The IRS Tax Withholding Estimator at irs.gov takes 15 minutes. Use it. The difference between Single and Married Filing Jointly at $75,000 income is roughly $4,000 in annual tax — that changes your per-paycheck withholding significantly.

2. Not Updating After Life Events

Got married? Had a kid? Bought a house? Each of these changes your optimal withholding. A new dependent can reduce your tax liability by $2,000 (the Child Tax Credit). But if you never update your W-4, your employer keeps withholding at the old rate. Payroll won't remind you. HR probably won't either. This is on you.

3. Leaving Free Money on the Table

According to a 2024 study by Financial Engines, roughly 25% of employees don't contribute enough to their 401(k) to capture the full employer match. That's free money. If your employer matches 50% up to 6% of salary, and you're only contributing 3%, you're giving up $1,125 per year on a $75,000 salary. Over 30 years at 7% average returns, that single mistake costs over $100,000 in retirement savings.

Check your latest stub. Compare it to your benefits enrollment. Run the numbers on the match. This takes 20 minutes and it might be the highest-paying 20 minutes of work you ever do.

What I Learned the Hard Way

My first real paycheck was in September 2017. I'd accepted a job at $52,000 — my first salaried position after years of hourly gigs. I did the simple math: $52,000 divided by 26 biweekly periods equals $2,000 per check. I was already budgeting around that number. Apartment, car payment, student loans, groceries — it all just barely fit.

Then the first deposit came through: $1,487.33. I remember the exact number because I stared at my banking app for a solid two minutes wondering if there was a second deposit coming. There wasn't. Between federal tax, Ohio state tax (which I hadn't even thought about), FICA, health insurance for the cheapest plan available, and a default 3% 401(k) contribution that I didn't realize I'd been auto-enrolled in, I lost over $500 per paycheck from what I expected. My entire budget was wrecked on day one.

The error story happened three years later. I moved from Ohio to a remote position based in Texas — no state income tax. But payroll kept withholding Ohio taxes for four months because nobody updated my state of residence in the system. I only caught it because I was comparing my January and May pay stubs side by side for a mortgage application. Four months of incorrect state tax withholding added up to about $680. Payroll corrected it, but I had to file an Ohio nonresident return to get the money back, and that took until the following March. If I hadn't checked? I probably would've lost that $680 forever — or at least until I filed taxes and noticed the discrepancy. Maybe.

That experience turned me into the person who checks every pay stub. It takes 90 seconds. Most of the time, everything is fine. But the one time it's not, you'll be glad you looked.

Run Your Own Numbers

Want to see exactly how much of your salary you'll take home? Our Salary Calculator breaks down federal tax, state tax, FICA, and common deductions for your specific situation. Plug in your numbers and see the full picture — no signup required.

Frequently Asked Questions

How often should I check my pay stub?

Every single pay period for the first three months at a new job. After that, check at least once a quarter and always after any life event — marriage, new baby, address change, or raise. Payroll systems glitch more often than you think.

What is the difference between gross pay and net pay?

Gross pay is your total earnings before any deductions. Net pay (take-home pay) is what actually hits your bank account after federal tax, state tax, FICA, insurance premiums, and retirement contributions are subtracted. For a $75,000 salary, the gap is typically $20,000 to $25,000 per year.

Why does my coworker with the same salary take home a different amount?

Filing status, number of allowances on the W-4, state of residence, 401(k) contribution percentage, health plan tier (single vs. family), and whether they contribute to an HSA or FSA all change the final number. Two people earning $75,000 can have net pay differences of $500+ per month.

What should I do if I find an error on my pay stub?

Document it immediately — screenshot the stub and note the discrepancy. Contact your payroll department in writing (email, not a hallway conversation) within the same pay period. Most states require employers to correct payroll errors within one to two pay cycles. Keep records of all communication.

Can my employer deduct money from my paycheck without telling me?

Mandatory deductions like federal tax, state tax, and FICA require no consent. But voluntary deductions — 401(k), insurance, union dues — need your written authorization. Unauthorized deductions are illegal in most states. If you see a line item you never agreed to, escalate it immediately.