How to Read Your Pay Stub: Every Line Explained
Gross pay, FICA, OASDI, YTD, pre-tax deductions — here's what each line on your pay stub actually means, in plain English.
Gross pay: the starting point
Every pay stub starts with gross pay — your total earnings for that pay period before anything is taken out. If you're salaried, this is your annual salary divided by the number of pay periods. If you're hourly, it's your rate multiplied by hours worked, including any overtime.
Pre-tax deductions: taken out before taxes are calculated
Pre-tax deductions reduce your taxable income before federal and state income tax are calculated — which is exactly why they're valuable. Common pre-tax deductions include:
- Traditional 401(k) or 403(b) contributions — reduces federal and state taxable wages
- Health insurance premiums (if offered through a Section 125 "cafeteria plan") — typically reduces federal, state, and FICA taxable wages
- HSA (Health Savings Account) contributions — similarly reduces taxable wages across the board
Here's the detail almost everyone misses: a traditional 401(k) contribution reduces your income tax wages but not your Social Security or Medicare wages. Health insurance premiums under a cafeteria plan, by contrast, usually reduce both. This is why your pay stub often shows two different "taxable wage" figures — one for income tax withholding and a separate, slightly higher one for FICA.
FICA: Social Security and Medicare
FICA stands for the Federal Insurance Contributions Act, and it's the umbrella term for two separate taxes that fund federal benefit programs:
- Social Security (6.2%) — sometimes labeled OASDI (Old-Age, Survivors, and Disability Insurance) on more detailed stubs. This tax stops once your year-to-date wages hit the annual Social Security wage base cap.
- Medicare (1.45%) — no wage cap, and high earners pay an additional 0.9% Medicare surtax above certain income thresholds.
Both are calculated on FICA taxable wages (gross pay minus any FICA-exempt pre-tax deductions like qualifying health insurance) — not on the lower income-tax taxable wage figure.
Federal and state income tax withholding
These lines reflect the estimated federal and (if applicable) state income tax withheld from this paycheck, based on the taxable wages figure, your filing status, and the withholding elections on your W-4. This is an estimate of what you'll owe for the year — it's reconciled against your actual tax liability when you file your return, which is why some people get refunds and others owe more.
Post-tax deductions
Some deductions come out after taxes are calculated, meaning they don't reduce your taxable income. Common examples include Roth 401(k) contributions, wage garnishments, union dues, and certain voluntary benefits like supplemental life insurance.
Net pay: what actually hits your bank account
Net pay (also called take-home pay) is what's left after every deduction — pre-tax, taxes, and post-tax — has been subtracted from gross pay. This is the number that actually gets deposited.
Worked example: a full pay stub breakdown
A single filer earning $65,000/year, paid biweekly, contributing 5% to a traditional 401(k) and paying $75/paycheck for health insurance:
| Line item | Amount |
|---|---|
| Gross pay | $2,500.00 |
| 401(k) contribution (5%, pre-tax for income tax only) | −$125.00 |
| Health insurance premium (pre-tax, reduces FICA too) | −$75.00 |
| FICA taxable wages (gross − health insurance) | $2,425.00 |
| Social Security (6.2% of FICA wages) | −$150.35 |
| Medicare (1.45% of FICA wages) | −$35.16 |
| Income tax taxable wages (gross − 401k − health insurance) | $2,300.00 |
| Federal income tax (estimate) | −$210.00 |
| State income tax (varies by state, estimate) | −$92.00 |
| Net pay | $1,812.49 |
Notice how the 401(k) contribution lowered the income-tax taxable wages ($2,300) but the FICA wages ($2,425) only excluded the health insurance premium — this is the two-different-taxable-wage-figures detail explained above, made concrete.
What does "YTD" mean?
YTD stands for "year-to-date" — a running total of each line item (gross pay, taxes, deductions, net pay) from January 1st through the current pay period. YTD figures are useful for checking your progress toward retirement contribution limits, confirming your Social Security wage base isn't being over-withheld, and generally sanity-checking that your annual totals are on track.
Frequently asked questions
Check your own numbers
Want to see how your specific salary, deductions, and state break down? These calculators mirror the same logic explained above: