Your pay stub contains more information than just your take-home pay. Understanding every line helps you catch errors, plan your budget, and file your taxes correctly. Here is a complete breakdown of what you will find on a typical pay stub.
Gross Pay vs. Net Pay
Gross pay is your total earnings before any deductions are taken out. If you earn $20 per hour and worked 80 hours in the pay period, your gross pay is $1,600. Net pay — sometimes called "take-home pay" — is what actually gets deposited into your account after all taxes and deductions are subtracted.
The gap between gross and net pay surprises many workers. On average, deductions reduce take-home pay by 20–35% depending on your tax situation and benefits elections.
Federal and State Tax Withholdings
Your employer is required to withhold several taxes from every paycheck:
- Federal Income Tax — based on your W-4 filing status and allowances
- Social Security (OASDI) — 6.2% of gross wages up to the annual wage base
- Medicare — 1.45% of all gross wages (an extra 0.9% applies above $200,000)
- Texas State Income Tax — Texas has no state income tax, so you will not see a state withholding line if you work in Texas
Pre-Tax Deductions
Pre-tax deductions are subtracted from your gross pay before taxes are calculated, which reduces your taxable income:
- Health, dental, and vision insurance premiums
- 401(k) or other retirement contributions
- Health Savings Account (HSA) contributions
- Flexible Spending Account (FSA) contributions
Post-Tax Deductions
Post-tax deductions come out after taxes. Common examples include Roth 401(k) contributions, union dues, and wage garnishments.
Year-to-Date (YTD) Totals
The YTD column shows cumulative earnings and deductions from January 1 through the current pay period. This is the number your W-2 will be based on at year end — so if your YTD gross does not match your expectation, investigate early rather than waiting until tax time.
Overtime Pay
Under the Fair Labor Standards Act, non-exempt employees in Texas must be paid 1.5× their regular rate for hours worked over 40 in a workweek. Check your pay stub to confirm overtime hours are separated from regular hours and calculated at the correct rate.
What to Do If Something Looks Wrong
Contact your employer's payroll department immediately if you notice a discrepancy. Common errors include wrong hourly rates, missing overtime, or incorrect benefit deductions. Keep copies of all pay stubs — you will need them when filing taxes or applying for a loan.
Need help generating accurate pay stubs for your employees? Create a free account and try our payroll tools, or contact Tina Agency of Texas for personalized payroll assistance.