How to read a pay stub in 2026

Quick answer: Your pay stub shows gross pay (what you earned) minus taxes (federal, state, FICA) and pre-tax deductions (401k, health insurance) to arrive at net pay (what you take home). Most employees never check whether the math is correct -- but withholding errors, benefit deduction errors, and FICA miscalculations are common and worth verifying at least once a year.

Your paycheck looks smaller than your salary because the distance between gross and net pay is wider than most people expect. A $75,000 annual salary paid biweekly gives you a gross check of $2,884.62. After federal withholding, Social Security, Medicare, and state taxes, take-home in a typical scenario might be $2,100-$2,200. The difference -- roughly 27-30% -- goes to a mix of taxes and pre-tax benefits. Here is what each line actually means.

Gross pay

Regular pay: Your base salary divided by the number of pay periods in the year. A $75,000 salary paid biweekly (26 pay periods) = $2,884.62 per check. Paid semi-monthly (24 periods) = $3,125. The number of pay periods is why your gross check looks lower than your annual salary divided by 12.

Overtime pay: Hours beyond 40 in a workweek, paid at 1.5x your regular rate under the FLSA. If you are salaried and exempt, this line will not appear. If you are hourly or non-exempt salaried, verify that overtime is calculated at the correct rate.

Other pay types: Some pay stubs show bonus pay, commission, or PTO payout as separate line items. These are taxable as ordinary income and may withhold at the supplemental rate (22% federal flat rate for most employers).

Federal income tax withholding

Federal income tax withheld is calculated using your W-4 filing status and any additional withholding you elected. The amount is NOT your actual tax liability -- it is an estimated payment toward what you will owe at tax time.

Why it may be too high or too low:

• Multiple jobs without adjusting W-4 withholding can cause under-withholding
• A large one-time bonus may cause over-withholding at the 22% supplemental rate when your actual marginal rate is lower
• Life changes (marriage, having a child, starting a second job) that do not trigger a W-4 update often cause withholding errors

If you consistently get a large refund, you are over-withholding -- lending the government money interest-free. If you owe a large amount each April, you are under-withholding. Adjust your W-4 at any time on the IRS website.

FICA: Social Security and Medicare

Social Security: 6.2% of wages up to the annual wage base ($168,600 in 2026). Once you hit the wage base, Social Security withholding stops for the rest of the year.

Medicare: 1.45% of all wages, with no cap. High earners (wages above $200,000 for single filers) pay an additional 0.9% Additional Medicare Tax.

Your employer matches your FICA contributions -- they pay another 6.2% + 1.45% on your behalf. As a W-2 employee, you only see your half.

For contract/1099 workers: You owe both halves of FICA as self-employment tax (15.3% on the first $168,600). This is one of the reasons independent contractor vs. W-2 matters significantly to your actual take-home.

State and local taxes

State income tax rates vary from 0% (Texas, Florida, Nevada, Washington, Wyoming, South Dakota, Alaska) to over 13% (California top bracket). For most employees in taxed states, state income tax is 3-6% of gross pay.

Some localities -- New York City, Philadelphia, Washington D.C. -- also have local income taxes that appear as a separate line item.

Pre-tax deductions

These lines reduce your taxable income before the federal and state tax is calculated. They reduce your tax bill.

401(k) / 403(b) contributions: The amount you elected to defer, up to $23,500 in 2026 (or $31,000 if you are 50 or older with catch-up). Pre-tax contributions reduce your W-2 box 1 income dollar-for-dollar. A $500 biweekly 401(k) contribution saves you $110-$220 in federal taxes per check depending on your marginal rate.

Health, dental, and vision insurance premiums: Most employer-sponsored plans let you pay your premium share pre-tax through a Section 125 (cafeteria) plan. This reduces both income tax and FICA.

HSA contributions: If you have a High Deductible Health Plan, employee HSA contributions via payroll are pre-tax for income tax AND FICA -- a better tax treatment than traditional 401(k) contributions (which only escape income tax, not FICA).

Flexible Spending Accounts (FSA): Pre-tax, up to $3,300 in 2026 for healthcare FSA.

Commuter benefits: Up to $325/month in pre-tax dollars for transit or parking.

Post-tax deductions

These reduce your net check but NOT your taxable income.

Roth 401(k) contributions: You pay taxes on this money now; withdrawals in retirement are tax-free.

Life and disability insurance premiums (some plans): Employer-paid premiums for coverage above $50,000 create imputed income; your pay stub will show this as taxable income addition.

Garnishments: If you have a court-ordered garnishment for child support, student loans, or tax debt, it appears here.

How to spot errors

Check YTD totals. Year-to-date figures let you catch compounding errors. If your YTD Social Security withholding exceeds your salary times 6.2%, something is wrong.

Verify your 401(k) contribution rate. A common error: you change your contribution percentage and the change does not take effect for one or two pay periods. Check that the dollar amount matches your elected percentage of current gross pay.

Confirm benefit deductions match enrollment. If you added a dependent during open enrollment, verify the higher premium amount appears.

After a salary increase: The new rate should appear starting on the effective date. Verify gross pay matches your new salary divided by pay periods, not your old salary.

For how to use your pay stub data to understand your total compensation picture, see what is total compensation and am I underpaid.

Frequently asked questions

Why is my net pay so much lower than my salary?

The gap between gross and net is typically 25-35% for most W-2 employees in medium-income ranges. Federal income tax (effective rate varies), FICA (7.65%), state income tax (0-10%), and pre-tax deductions all reduce the check. A $100,000 salary paid biweekly results in roughly $2,900-$3,200 per check after typical withholding.

Why did my paycheck change when I did not change anything?

Three common causes: (1) your Social Security withholding stopped because you hit the $168,600 annual wage base, making your check larger; (2) a benefit deduction changed at the start of the plan year; (3) a federal or state tax table changed at the start of the calendar year.

What is imputed income on a pay stub?

Imputed income is the taxable value of a benefit you receive that the IRS treats as compensation even though you did not receive cash. The most common: employer-paid group life insurance above $50,000, use of a company car, and some tuition reimbursements above $5,250. It adds to your taxable income but not to your check.

Can I change how much is withheld from my paycheck?

Yes, by filing a new W-4 with your employer's payroll department. You can also add a flat dollar amount of additional withholding if you expect to owe at tax time. The W-4 adjustment takes effect for the next payroll run.

What if I think my employer made a payroll error?

Contact payroll or HR promptly. For underpayment errors, employers are required to make corrections. For tax withholding errors, the correction window is limited (the pay period, or sometimes the tax year). Document your request in writing.

Paste your current compensation into SalaryCheck to benchmark your total comp against your local market.