Gross pay is what you earn; net pay is what you keep
Every pay stub starts with gross pay and ends with net pay. Gross pay is your total earnings for the period before anything is taken out. Net pay, or take-home pay, is what reaches your bank account.
The lines in between fall into three groups. There are taxes, such as federal income tax, Social Security and Medicare. There are pre-tax deductions, such as 401(k) contributions and some health premiums. And there are after-tax deductions, such as Roth 401(k) savings or wage garnishments.
Most stubs show two columns for each line. “Current” is this pay period. “YTD” (year to date) is the running total since January 1.
Federal income tax withholding and Form W-4
Federal income tax withholding is an estimate, not your final tax. Your employer uses the Form W-4 you filled out and IRS tables to guess how much to hold back each payday.
The W-4 asks for your filing status, whether you have more than one job, dependents you expect to claim, and any extra amounts. Changing these entries changes your withholding. It does not change what you actually owe for the year.
When you file your return, the IRS compares your real tax with what was withheld. Too much withheld means a refund. Too little means a balance due. The IRS Tax Withholding Estimator can help you check your W-4 entries.
Bonuses and other extra pay may be withheld at a flat rate instead of through the regular tables. That can make a bonus check look heavily taxed. The final tax on the bonus is still settled on your return, at your actual rates.
A new W-4 is worth reviewing after big life changes, such as marriage, a new baby, a second job or a large raise. Each of these can shift how closely withholding matches your real tax.
FICA: Social Security and Medicare
FICA is a flat payroll tax that funds Social Security and Medicare. Its rates do not depend on your W-4. Your employer pays a matching share that does not appear as a deduction on your stub.
| Tax | Employee rate | Applies to (2026) |
|---|---|---|
| Social Security (OASDI) | 6.2% | Wages up to $184,500 |
| Medicare | 1.45% | All wages, no cap |
| Additional Medicare Tax | 0.9% | Wages over $200,000 (withholding trigger) |
Sources: Social Security Administration (wage base) and IRS Topic 751 (FICA rates).
Once your wages from one employer pass $184,500 in 2026, Social Security withholding stops for the rest of the year. The most an employee pays is 6.2% × $184,500 = $11,439. For 2027 the wage base rises to $192,300.
The Additional Medicare Tax works differently. Your employer must start withholding the extra 0.9% once your wages pass $200,000 in the year, no matter your filing status. Your actual liability depends on your filing status: the threshold is $200,000 single or head of household, $250,000 married filing jointly and $125,000 married filing separately. Any difference is settled on your return.
Pre-tax deductions and why they affect taxes differently
A traditional 401(k) contribution lowers federal income tax but not FICA. This is why your stub may show different taxable wage amounts for different taxes.
If you earn $3,000 and put $150 in a traditional 401(k), income tax withholding is based on $2,850. Social Security and Medicare are still figured on the full $3,000. Roth 401(k) contributions reduce neither.
Health, dental and vision premiums paid through a cafeteria plan are often handled differently. They usually reduce both income tax and FICA wages. Your stub or HR department can confirm how each deduction is treated.
This gap also explains why Box 1 of your W-2 is often lower than Boxes 3 and 5. Box 1 is income tax wages. Boxes 3 and 5 are Social Security and Medicare wages.
Worked example: one biweekly paycheck
Take a single employee earning $78,000 a year, paid every two weeks (26 paychecks). She puts 5% of pay in a traditional 401(k). She has no other income or deductions.
Gross pay: $78,000 ÷ 26 = $3,000. 401(k): 5% × $3,000 = $150.
Federal income tax (simplified estimate): annual 401(k) is $150 × 26 = $3,900. Estimated taxable income is $78,000 − $3,900 − $16,100 standard deduction = $58,000. Tax on $58,000 from the 2026 single brackets is $5,800 + 22% × ($58,000 − $50,400) = $7,472. Divided by 26, that is about $287.38 per paycheck. Real withholding uses the IRS percentage method and your W-4, so actual amounts will differ somewhat.
| Line | This period | How it is figured |
|---|---|---|
| Gross pay | $3,000.00 | $78,000 ÷ 26 |
| Traditional 401(k) | −$150.00 | 5% × $3,000 |
| Federal income tax | −$287.38 | $7,472 ÷ 26 (simplified) |
| Social Security | −$186.00 | 6.2% × $3,000 |
| Medicare | −$43.50 | 1.45% × $3,000 |
| Net pay | $2,333.12 | $3,000 − $666.88 |
State and local income taxes are not included. In a state with income tax, another line would reduce net pay further.
Over a full year, this works out to about $2,333.12 × 26 = $60,661.12 of take-home pay. Her FICA total for the year is $186 × 26 = $4,836 of Social Security plus $43.50 × 26 = $1,131 of Medicare.
Notice that the 401(k) saved her income tax but not FICA. Without the $3,900 contribution, her estimated taxable income would be $61,900. The extra $3,900 would fall in the 22% bracket, adding $858 of tax for the year, or $33 per paycheck. Her Social Security and Medicare lines would stay exactly the same.
State, local and other lines you may see
Many stubs include lines beyond federal taxes. State income tax withholding appears in most states that have an income tax. Some cities and counties also withhold local income tax.
Some states take out their own payroll taxes, such as for disability or paid family leave programs. These vary widely. This guide and our calculators cover federal taxes only, so check your state tax agency for its rules.
You may also see employer-paid items listed for information only, such as the employer’s 401(k) match or the cost of health coverage. These do not reduce your net pay.
Reading the YTD column
Year-to-date totals help you spot errors and track caps. After her 20th paycheck, this employee’s stub would show $60,000 of YTD gross pay, $3,720 of Social Security and $870 of Medicare.
Compare YTD figures with what you expect. If YTD Social Security keeps growing past $11,439, something is off. If you changed jobs mid-year, each employer tracks the wage base separately. Any excess Social Security withheld across employers is generally claimed back as a credit on your federal return.
Your final pay stub of the year should roughly match your W-2. Small differences can come from benefits or taxable fringe items.
The YTD column is also a quick way to check withholding mid-year. Take YTD federal income tax, divide by the number of paychecks so far, and multiply by your total paychecks for the year. Compare that rough figure with the tax you expect to owe. A large gap may be a reason to revisit your W-4.
Keep at least your last stub of each year. It can help if a W-2 is late, lost or appears to contain an error. It also gives you a record of pre-tax savings and benefit costs for the year.
Estimate your own take-home pay
To model your own pay period, try the Paycheck Calculator. Enter your salary, pay frequency and 401(k) percentage to see an estimate of federal withholding, FICA and net pay. It covers federal taxes only.