Most people look at exactly one number on their pay stub, which is the one at the bottom. That is understandable. It is also how thousands of dollars a year go unexamined.
The stub is the only document that shows the complete path from what your employer agreed to pay you to what actually lands in your account. Everything that happens in between happens because of a rule, a form you filled out, or an election you made during open enrollment. Once you can read the lines, you can tell which of those you control.
Here is what each section is doing.
Gross Pay and the Two Kinds of It
Gross pay is your earnings before anything comes out. On most stubs it is broken into components: regular hours, overtime, bonus, commission, paid time off taken. If you are salaried, it is your annual salary divided by the number of pay periods, which is 26 if you are paid biweekly and 24 if you are paid twice a month. Those are not the same thing, and people confuse them constantly. Biweekly means two months a year contain three paychecks.
Some stubs also show a second figure called taxable gross or FICA-taxable wages. It is usually smaller than gross pay, and the gap is your pre-tax deductions. That gap is the whole reason pre-tax benefits are worth using, and we will get to it.
Social Security and Medicare, the FICA Lines
These two are federal payroll taxes, and unlike income tax withholding they are not estimates. They are fixed percentages with no adjustment for your filing status or dependents.
Social Security takes 6.2% of your wages, and your employer matches it with another 6.2%. It applies only up to an annual earnings cap that Congress adjusts each year. For 2026 the Social Security wage base is $184,500, which means the most any single employer withholds from you for Social Security this year is $11,439. Earn past that point and the line stops appearing. High earners sometimes notice their paycheck getting bigger in the fall and assume payroll made a mistake. Payroll did not.
Medicare takes 1.45%, also matched by your employer, and it has no cap at all. It keeps coming out of every dollar. On top of that, an Additional Medicare Tax of 0.9% applies to wages above $200,000 for single filers and $250,000 for married couples filing jointly. Your employer withholds it based on your wages alone, so dual-income couples sometimes find they owe a bit more at filing time than what was withheld.
One quirk worth knowing: if you change jobs mid-year, each employer starts your Social Security wage base over from zero. You can end up overpaying. That excess is recoverable as a credit when you file your return, but only if you notice.
Income Tax Withholding Is a Guess Your Employer Is Making
Federal income tax withholding is the line people misunderstand most, because it is not a tax. It is a prepayment estimate.
Your employer calculates it from the Form W-4 you submitted, applying IRS tables to your wages for that pay period. If your income is steady and your W-4 is accurate, the estimate lands close and your April refund or balance due is small. If anything is unusual, and unusual includes a second job, a working spouse, significant freelance income, a large bonus, or a mid-year raise, the estimate drifts.
Bonuses drift in a particularly visible way. Employers commonly withhold supplemental wages at a flat 22% federal rate, which feels punishing if your marginal rate is lower and inadequate if it is higher. Neither outcome changes what you actually owe. It only changes when you settle up.
The fix is not complicated. The IRS maintains a Tax Withholding Estimator that compares your year-to-date withholding against your projected liability and tells you what to change. Running it once around the middle of the year is enough for most people. State withholding works on the same principle with its own form and its own tables, and nine states do not withhold income tax at all.
Pre-Tax Deductions Shrink the Number Being Taxed
This is where the stub gets interesting, because these lines reduce your taxable wages before withholding is calculated.
Traditional 401(k) contributions are the big one. Money you defer into a traditional 401(k) does not count as taxable income this year, so contributing reduces your federal and state income tax withholding immediately. For 2026 the employee deferral limit is $24,500, up from $23,500 the prior year. If you are 50 or older you can add a catch-up contribution of $8,000, and if you turn 60, 61, 62, or 63 during the year, the catch-up rises to $11,250 under a provision that took effect recently.
Worth noting: 401(k) deferrals reduce income tax but not Social Security and Medicare. FICA is calculated on your wages before retirement deferrals come out. Health insurance premiums, on the other hand, usually run through a Section 125 cafeteria plan and reduce both, which makes employer health coverage more tax-efficient than most people assume. The same applies to health savings account contributions made through payroll and to flexible spending account elections.
If you contribute to a Roth 401(k) instead, the deduction appears on your stub but your taxable wages do not go down, because Roth contributions are made after tax. Seeing that difference on the stub is the clearest illustration of what you are choosing between.
After-Tax Deductions and the Odd Line Called Imputed Income
Below the tax section sits everything taken out after the tax math is done. Roth contributions, union dues, garnishments, charitable giving through payroll, repayment of a 401(k) loan, the parking pass. These reduce your take-home without reducing your tax bill.
Then there is imputed income, which confuses everyone the first time it shows up. It is the value of a non-cash benefit that the IRS treats as taxable compensation. The most common example is employer-paid group term life insurance above $50,000 of coverage. You never receive the money, but its value gets added to your taxable wages, taxed, and then subtracted back out so your net pay is unchanged. Domestic partner health coverage and personal use of a company vehicle work the same way. The line looks alarming and is usually correct.
The Column Almost Nobody Reads
Every stub carries a year-to-date column next to the current-period figures, and it is the most useful thing on the page.
It tells you whether you are on pace to hit the 401(k) limit, which matters if your employer matches per paycheck rather than truing up at year end, because maxing out in October means missing matches in November and December. It tells you how close you are to the Social Security wage base. It tells you whether your total withholding is tracking against what you will owe. And it gives you the numbers to compare against your W-2 in January, which is the only realistic way to catch a payroll error before it becomes a tax problem.
Read it once a quarter. Compare gross year-to-date against what you expected to have earned, check that your benefit elections are still coming out at the amounts you chose, and confirm the withholding looks proportionate. Five minutes, four times a year.
Payroll departments make mistakes, benefit elections fail to carry over after open enrollment, and rate changes get applied to the wrong pay period. None of that gets caught by looking only at the bottom line.