A pay stub answers a question most people never ask out loud: where did the rest of it go? The top line is what you earned. The bottom line is what landed in your account. The block of abbreviations in between is not one deduction with several names. It is four different systems, each with its own rulebook, stacked on top of each other.
Read them in order and the wall of acronyms turns into a short list. Every subtraction on a US pay stub belongs to one of three groups: payroll taxes fixed by law, income tax withheld on the strength of a form you filled in once, and deductions you chose yourself. Knowing which group a line belongs to tells you the only thing that matters practically, which is whether you can do anything about it.
Gross pay is rarely a single number
The top of the stub is your gross pay for the period, and on most stubs it is broken into parts: regular hours, overtime, commission, a bonus, sometimes the taxable value of a benefit.
The split matters because the IRS treats some of it differently. Bonuses, commissions, back pay, overtime and sick pay are what the IRS calls supplemental wages. When an employer identifies them separately from regular wages, it can withhold at a flat rate instead of running them through the normal tables. Publication 15 puts that flat rate at 22%, and at 37% for supplemental wages above $1 million paid to one employee in a calendar year.
This is the single most misread line on any stub. A bonus that appears to have been taxed at 22% has not been taxed at 22%. It was withheld at 22%. Your actual tax on that money is settled on your return, and if your real rate is lower, the difference comes back.
FICA: the two lines that never negotiate
Below gross pay sit the two federal payroll taxes, usually labelled FICA, OASDI, MED, or some combination. These are the least negotiable numbers on the page.
| Line | Your share | Employer share | Ceiling |
|---|---|---|---|
| Social Security (OASDI) | 6.2% | 6.2% | $184,500 of wages in 2026 |
| Medicare | 1.45% | 1.45% | None |
| Additional Medicare | 0.9% | None | Applies above $200,000 |
Three things in that table are worth pausing on.
Your employer pays the same again, and you never see it. The IRS states the rates as 6.2% each for employer and employee, 12.4% in total, and 1.45% each, 2.9% in total. Your stub shows one half. The other half is real money spent on your employment that simply never passes through your pay.
Only Social Security has a ceiling. For earnings in 2026 the wage base limit is $184,500. Publication 15 puts it plainly: stop collecting the employee share of Social Security tax once wages and tips for the year reach that figure, but keep collecting Medicare for the whole year on all wages. If you earn above the base, your take-home quietly rises partway through the year and drops again in January. Nothing has changed except the calendar.
The third Medicare line is employee-only. An employer must withhold an extra 0.9% Additional Medicare Tax on wages above $200,000 in a calendar year, starting in the pay period the threshold is crossed. There is no employer match for it, and the $200,000 trigger applies regardless of filing status, which is why a married couple can owe more or less than what was withheld.
Federal income tax withholding is an estimate, not a bill
The federal income tax line is fundamentally different from the FICA lines above it, and the difference is the reason people are surprised every April.
FICA is arithmetic: a fixed percentage of a defined wage figure. Federal income tax withholding is a forecast. Your employer takes the Form W-4 you filed, applies the methods in the IRS withholding publications, and produces a per-period estimate of what your annual liability will be. Your return then computes the real number and reconciles the two.
That is why a large refund is not a win and a bill is not a penalty. Both mean the forecast was off. The lever is the W-4, not the payroll department, and the time to pull it is the moment something changes: a second job, a spouse’s income, a new child, a large bonus.
Pre-tax deductions do two jobs at once
Below the tax block sit the deductions you elected. Some come out before tax is calculated and some after, and the order is the whole point.
A traditional 401(k) contribution and most employer health premiums come out pre-tax. Every dollar you send there is a dollar that never enters the figure your income tax withholding is computed on. The contribution reduces both your take-home pay and your taxable wages, which is why the drop in net pay is always smaller than the contribution itself.
For 2026 the IRS raised the elective deferral limit for 401(k), 403(b), governmental 457 plans and the federal Thrift Savings Plan to $24,500, up from $23,500. The catch-up limit for employees aged 50 and over is $8,000, so most people in that group can put in $32,500 a year. A higher catch-up applies at ages 60 through 63, set at $11,250 for 2026. The separate IRA limit rose to $7,500.
Post-tax deductions sit further down: Roth 401(k) contributions, some insurance, union dues, garnishments, and at employers that still run one, a payroll savings plan. If yours offers a payroll deduction into savings bonds, that line belongs in this group, and it behaves like any other automatic transfer out of net pay.
Why net pay is never a round number
Here is the answer to the question that brings most people to their stub in the first place.
Payroll rounds to the nearest cent every single time it calculates, on every wage payment. Publication 15 describes exactly this in its guidance on fractions-of-cents adjustments: the small differences that show up between what was withheld across a quarter and what the totals say should have been withheld are caused by rounding to the nearest cent each time payroll is figured for Social Security and Medicare.
A round gross figure produces round percentages. Real gross pay is almost never round, because it comes from an hourly rate multiplied by hours that include fractions, or from an annual salary divided by a number of pay periods that does not divide cleanly. Apply 6.2% and 1.45% to that, add a percentage-based retirement contribution, a health premium spread across a year of pay periods, and a withholding figure computed from tables, and the bottom line lands somewhere with no relationship to any round number you had in mind.
None of that is an error. A net pay ending in an ugly number is what correct payroll looks like.
The year-to-date column is the one people skip
Most stubs carry a year-to-date column next to the current-period one, and it is more useful than the period column for three specific checks.
Look at YTD Social Security wages against the $184,500 base, so you know when your take-home is about to change. Look at YTD gross against $200,000 if you are near it, because that is when the Additional Medicare line appears. And look at YTD retirement contributions against the $24,500 limit around October, because hitting the cap early stops the employer match in many plans for the rest of the year.
The other thing the YTD column gives you is a real annual income figure. Not the salary you quote, the one you actually banked. That is the number to feed into a household budget, and the number that makes a decision like where the emergency fund should sit concrete rather than theoretical.
A five-minute check, once a period
Confirm the hours and rate at the top, since the rest of the page is built on them. If your employer still hands you a paper cheque with the stub attached, it is worth knowing what each field on the cheque actually does before you endorse and deposit it. Confirm the FICA percentages against your gross for the period, which is the fastest way to catch a misclassified wage type. Confirm that every voluntary deduction is one you recognise, because stale elections outlive the reason you made them.
Then do something with what you learn. If the stub shows a comfortable gap between net pay and outgoings, moving that gap somewhere it earns is the obvious next step, and an account paying a real rate does more with it than the checking account it is currently sitting in.
If the gap goes the other way, the stub is also where the fix starts. Knowing your genuine monthly net makes a repayment plan an arithmetic problem rather than a guess, and running the numbers on a payoff schedule is faster once you know exactly what lands each month. Which debt to aim at first depends on what each balance actually costs you, and the ordering question has a fairly settled answer once the rates are in front of you.
The stub is not just a receipt. It is the only monthly statement you get that shows the full price of your own employment, and the rest of how money moves in and out of your accounts is easier to reason about once this page makes sense. Once you know what actually lands, a budgeting app can hold the rest of the arithmetic for you.