Your Paycheck, Annotated: Every Line, Deduction, and Acronym Explained

The first time you look at a pay stub, it reads like a ransom note written by an accountant. You earned $1,760. You received $1,312.59. Somewhere in between, six lines with acronyms took the rest, and nobody at work ever sits you down to explain them.

So let's do that here. Below is a complete sample pay stub for a fictional worker — Maya, an hourly employee in Phoenix, Arizona — with every line numbered. Then we'll walk through each number and translate it into plain English. By the end, you'll be able to read any pay stub in the country, because they all follow this same skeleton even when the layout differs.

① Gross pay: the number the job offer talked about

Gross pay is everything you earned before anyone touched it: 80 hours at $22.00 an hour is $1,760. If Maya had overtime, a bonus, or tips, they'd appear here too. This is the number your offer letter quoted — and the last time you'll see it intact.

②–③ Pre-tax deductions: money that leaves before taxes are counted

Some deductions come out before your taxes are calculated, which shrinks the income the IRS gets to tax. Maya pays $85 per check for her share of health insurance through a "Section 125" (cafeteria) plan, and puts 5% — $88 — into a traditional 401(k) retirement account.

Here's the subtle part most people never learn: different pre-tax deductions escape different taxes. Her health premium escapes federal income tax and Social Security and Medicare taxes. Her traditional 401(k) contribution escapes federal income tax but not Social Security and Medicare. That's why her Social Security tax below is 6.2% of $1,675 ($1,760 minus the $85 premium), not 6.2% of $1,587.

④ Federal income tax withholding: an estimate, not a bill

The $106.59 federal line isn't a fee and isn't a final tax — it's a prepayment. Your employer estimates your yearly tax using the choices you made on Form W-4 and the IRS's withholding tables, then sends a slice of each check to the IRS on your behalf. In April, when you file a tax return, the real bill is calculated; if the prepayments ran high you get a refund, and if they ran low you owe the difference.

For Maya — single, no adjustments, about $41,262 a year in taxable wages after pre-tax deductions — the 2026 tables produce roughly $107 per biweekly check. Yours will differ with your W-4 answers, and that's the point: withholding is adjustable. The IRS's free Tax Withholding Estimator shows how your W-4 entries change this line.

⑤ Social Security (a.k.a. OASDI, a.k.a. half of "FICA")

Social Security tax is a flat 6.2% of your Social Security wages, and your employer pays a matching 6.2% that never appears in your deductions — for Maya, $103.85 from her and $103.85 from Desert Sky. The rates come from federal law and are published by the IRS in Topic 751.

One feature worth knowing: this tax has a ceiling. For 2026, only the first $184,500 of wages is taxed for Social Security, per the Social Security Administration — the figure resets each year. Medicare, by contrast, has no ceiling at all.

⑥ Medicare: 1.45%, no ceiling

Medicare tax is 1.45% of the same wage base, matched again by your employer — $24.29 each, here. High earners pay an extra 0.9% "Additional Medicare Tax" on wages above $200,000 in a year (that threshold doesn't adjust for inflation), and employers must start withholding it once your pay crosses that line. Maya won't meet it this year, and that's true of most people.

⑦ State income tax: the line that depends on your address

Maya lives in Arizona, which uses a flat income tax; on Arizona's Form A-4 she elected a 2.5% withholding rate, producing $39.68. Your version of this line depends entirely on your state: nine states, including Texas, Florida, and Washington, withhold no state income tax at all, while others use graduated brackets, and some cities (New York City, for example) add a local income tax line beneath it.

⑧ Net pay: what's actually yours to spend

$1,760.00 minus $173 in pre-tax deductions and $274.41 in taxes leaves $1,312.59 — about 74.6 cents of every gross dollar. That ratio isn't fixed; it shifts with your income, state, W-4, and benefits. If your net suddenly changes without a raise or a W-4 update, that's your cue to pull the stub and find which line moved. Most people receive this by direct deposit; if you're comparing bank accounts for that deposit, fee schedules matter more than you'd think — we've decoded a real one here.

⑨ The YTD column: your running totals

"YTD" means year-to-date — everything since January 1. This column is quietly the most useful thing on the stub. It's how you catch a 401(k) contribution that stopped without your say-so, verify your income when you apply for an apartment or a loan, and pre-check the numbers that will land on your W-2 in January. Your final stub of the year should reconcile with that W-2 almost line for line — and if you're unsure why the W-2 matters so much, here's how W-2 and 1099 income are taxed differently.

⑩ The employer-paid section: money you never see

Good stubs list what the employer pays on top of your wages: the matching 6.2% and 1.45%, plus federal and state unemployment taxes (FUTA and SUTA) that fund unemployment benefits. None of it comes out of your check. It's listed because it's part of what you cost — and part of what you're entitled to later, since your Social Security wage record is built from these reports.

Four stub mysteries that aren't errors

Payroll departments field the same confused questions every cycle. Here are the usual suspects, pre-solved:

• "My overtime rate looks wrong." Federal law sets overtime at 1.5× your regular rate, which can include certain bonuses and differentials — so the overtime line sometimes computes from a slightly higher number than your base wage, not a lower one. If it computes from a lower one, that is worth a question.
• "There's a line called imputed income and it added money I never got." Some benefits — employer-paid life insurance above $50,000, a gym stipend, certain moving costs — are taxable even though they aren't cash. Payroll adds their value to your taxable wages ("imputes" it), taxes you on it, then subtracts it back out. You didn't get extra money; the IRS just got to see it.
• "Two checks in a row had different federal withholding but same pay." Usually a mid-year W-4 change, a bonus taxed at the flat supplemental rate (22% federal for most bonuses in 2026), or a third paycheck month on a biweekly schedule interacting with benefit deductions taken only twice monthly.
• "There's a deduction called garnishment." A court or agency order — child support, tax levy, or a judgment — requiring your employer to redirect part of your pay. Federal law caps how much of your disposable earnings most garnishments can take and bars firing you over a single garnishment. If one appears that you don't recognize, ask payroll for the order's paperwork; you're entitled to know who's collecting and why.

Reading your own stub: a 60-second checklist

• Hours and rate. Multiply them yourself. Wage errors are usually honest and usually fixable — but only if noticed.
• Every deduction has a name you recognize. A line you can't identify deserves a question to payroll or HR.
• Social Security is 6.2% and Medicare is 1.45% of the right wage base. These are flat; they're easy to verify.
• YTD totals climb sensibly. A benefits deduction that doubles, or a 401(k) line frozen since March, shows up here first.
• Your W-4 still matches your life. Marriage, a second job, or a side gig all change what withholding should be.

A pay stub never stops being a dense little document. But it's dense the way a receipt is dense, not the way a mystery is: every line has a fixed meaning, most of the percentages are published law, and once you've walked through one stub slowly, you've effectively read them all.