What Is a Pay Stub and What Information Does It Include?

A pay stub, often referred to as a paycheck stub, is a document employers provide to employees detailing wages earned and deductions taken from gross pay for a specific pay period. Understanding this document is important for personal financial management and verifying the accuracy of earnings and withholdings.

Defining a Pay Stub

A pay stub is a statement issued by an employer that outlines an employee’s compensation for a particular pay period. This document details gross wages earned before deductions, itemizes all withholdings like taxes, and shows the net pay an employee receives. The pay stub functions as a formal record, helping employees track income and ensure proper payment.

Components of a Pay Stub

A typical pay stub includes several key pieces of information. It begins with identifying details for the employee and employer, such as names, addresses, and employee identification numbers. The pay stub also specifies the pay period dates and the actual pay date.

The document separates gross pay from net pay. Gross pay represents total earnings before any deductions, encompassing regular wages, overtime pay, bonuses, or commissions. Net pay is the final amount an employee receives after all deductions.

Various taxes are withheld from gross pay. These include federal income tax, determined by an employee’s W-4 form settings and income level. State and local income taxes may also be withheld depending on the employee’s location. Federal Insurance Contributions Act (FICA) taxes are mandatory for Social Security and Medicare. For 2025, Social Security tax is 6.2% on earnings up to a wage base limit of $176,100, while Medicare tax is 1.45% with no wage base limit.

Beyond taxes, pay stubs detail other deductions, categorized as pre-tax or post-tax. Pre-tax deductions, such as contributions to a traditional 401(k) retirement plan or health insurance premiums, are subtracted from gross pay before taxes are calculated, reducing the employee’s taxable income. Post-tax deductions, like Roth 401(k) contributions, union dues, or wage garnishments, are taken out after taxes and do not reduce taxable income. Pay stubs often show year-to-date (YTD) totals for earnings and deductions, providing a cumulative summary.

Understanding Your Earnings and Deductions

Interpreting the figures on a pay stub involves understanding the flow from gross earnings to net pay, and how various deductions affect the final amount received. Gross pay is the starting point, representing all compensation earned before any amounts are subtracted. This figure is then reduced by both mandatory and voluntary deductions.

Mandatory deductions primarily consist of federal, state, and local income taxes, along with FICA taxes. Federal income tax withholding is an advance payment towards an employee’s annual tax liability, adjusted based on the information provided on their Form W-4. FICA taxes fund Social Security and Medicare programs. These statutory withholdings are crucial for funding social programs and meeting tax obligations.

Voluntary deductions, on the other hand, include amounts that employees elect to have withheld for benefits or savings. Pre-tax deductions, such as health insurance premiums, Health Savings Account (HSA) contributions, or traditional 401(k) contributions, lower an employee’s taxable income, which can result in a lower overall tax burden. Post-tax deductions, like Roth 401(k) contributions or certain life insurance premiums, are withheld after taxes have been calculated and do not reduce current taxable income. The distinction between pre-tax and post-tax deductions is important because it directly impacts an employee’s current tax liability and future access to funds.

Accessing and Managing Your Pay Stub

Employees typically access pay stubs through various methods provided by their employer. Many companies offer digital access via online employee portals, allowing secure viewing and downloading. Some employers still provide physical paper stubs, or details might be included with direct deposit statements. It is common practice for employers to offer electronic delivery, sometimes requiring employee consent for paperless options.

Reviewing pay stubs regularly is important. It allows employees to verify the accuracy of their earnings, ensuring correct hours worked, pay rates, and any bonuses are properly reflected. Discrepancies can be identified and addressed promptly with the payroll department. Regularly checking pay stubs also helps in understanding tax withholdings, which can prevent unexpected tax bills or large refunds at tax time.

Maintaining a record of pay stubs is beneficial for personal financial planning and administrative needs. Pay stubs serve as proof of income for loans, mortgages, or rental agreements. They are valuable for budgeting and tracking financial progress. For tax purposes, the Internal Revenue Service (IRS) recommends keeping tax-related documents, including pay stubs, for at least three years from the date a tax return was filed. This retention period aligns with the IRS’s audit window and provides essential documentation in case of discrepancies or questions regarding reported income and withholdings.