What Is a Document Showing Your Gross and Net Pay?

An earnings statement, often called a pay stub or pay slip, is an official document provided by an employer. It details an employee’s compensation for a specific pay period, serving as a record of how total earnings are calculated and what amounts are withheld. This document helps employees understand their pay and provides transparency regarding wages, making it a fundamental financial record.

Understanding Your Earnings Statement

An earnings statement is a detailed breakdown of an employee’s compensation for a specific pay period. Employers provide this document to show how gross pay is determined and what deductions are applied. It serves as an official record of financial transactions. The statement categorizes information into earnings, deductions, and year-to-date totals, offering a comprehensive overview of payroll activity.

This document helps employees understand the components contributing to their take-home pay. It itemizes wages earned and all amounts subtracted before final payment. Employers are often required to provide these statements to ensure transparency and maintain accurate payroll records.

Key Information on Your Earnings Statement

Your earnings statement provides a detailed account of your compensation, distinguishing between what you earn before and after deductions. Understanding these components helps manage personal finances. Key sections include gross pay, various deductions, net pay, and year-to-date totals.

Gross pay represents your total earnings before any deductions are taken out. This amount can include regular salary or hourly wages, overtime pay, bonuses, and commissions. For hourly workers, gross pay is calculated by multiplying the hourly rate by hours worked, plus any overtime. Salaried employees have their annual salary divided by the number of pay periods to determine gross pay per period.

Deductions are amounts withheld from gross pay, falling into several categories.

Pre-tax deductions are subtracted from gross pay before taxes are calculated, which reduces taxable income. Examples include contributions to health insurance premiums, Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and traditional 401(k) retirement plans. These deductions can lower your overall tax burden.

Tax deductions are mandatory withholdings by government entities. These include federal, state, and local income taxes, based on earnings and W-4 form information. Federal Insurance Contributions Act (FICA) taxes, comprising Social Security and Medicare taxes, are also mandatory. For 2025, the Social Security tax rate is 6.2% on earnings up to a wage base limit, while the Medicare tax rate is 1.45% on all earnings. An additional Medicare tax of 0.9% applies to wages exceeding $200,000 for individuals.

Post-tax deductions are taken from pay after all applicable taxes have been calculated and withheld. These deductions do not reduce taxable income. Examples include Roth 401(k) contributions, union dues, certain insurance premiums, charitable contributions, and wage garnishments for obligations like child support or loan repayments.

Net pay, often referred to as take-home pay, is the amount you receive after all pre-tax, tax, and post-tax deductions have been subtracted from your gross pay. This is the final amount deposited into your bank account or issued as a check. Your earnings statement also shows year-to-date (YTD) totals for all earnings and deductions, providing a cumulative summary of your financial activity throughout the year.

Accessing and Utilizing Your Earnings Statement

Accessing earnings statements is increasingly convenient, with most employers providing them through secure online payroll portals. These digital platforms allow employees to view and download pay stubs at any time. Some employers may still issue paper pay stubs or direct deposit advice slips, which serve the same purpose. Knowing how to access this document is important for various personal and financial needs.

Your earnings statement serves multiple practical purposes. It is an important tool for personal financial planning and budgeting, helping you understand consistent income after all deductions. The statement also acts as official proof of income, frequently required for financial applications such as mortgages, car loans, or rental agreements. Lenders and landlords often request these documents to verify financial capacity.

For tax preparation, earnings statements provide detailed information on taxes withheld, which is important for accurately filing income tax returns. While your W-2 form summarizes annual earnings and withholdings, your pay stubs offer a breakdown for each pay period. Regularly reviewing your earnings statement allows you to verify the accuracy of wages, hours worked, and deductions, helping to identify and address any potential discrepancies. These statements also enable you to track contributions to retirement accounts and other benefits.