What percentage of my paycheck goes to taxes?

For most workers, 25-35% of gross pay goes to all taxes combined: federal income tax (10-22% for most), Social Security (6.2%), Medicare (1.45%), and state income tax (0-13.3% depending on state). On a $75K salary, expect roughly $1,087 per biweekly paycheck in total tax withholdings.

How do I read the deductions on my pay stub?

Deductions fall into two categories: mandatory (federal tax, state tax, Social Security, Medicare) and voluntary (401k, health insurance, HSA, FSA). Pre-tax deductions reduce your taxable income, while post-tax deductions like Roth 401k come out after taxes are calculated.

What should I do if my pay stub has an error?

Contact your HR or payroll department immediately. Common errors include wrong hours, incorrect tax withholding after a life change, or missing 401k contributions. Keep copies of your pay stubs to document discrepancies. Most payroll errors can be corrected in the next pay cycle.

How to Read Your Pay Stub: Every Line Item Explained (2026)

Updated for 2026 Economic Year 9 min read All Articles

Why Your Pay Stub Matters

Your pay stub is the most important financial document you receive every two weeks — and most people never read it. It tells you exactly where your money goes before it reaches your bank account. Understanding each line item helps you catch errors (which happen more often than you think), optimize your tax withholding, and understand your true compensation beyond just your salary.

This guide walks through every section of a typical pay stub with real examples and explains what each deduction means for your finances.

The 5 Sections of Every Pay Stub

Most pay stubs follow the same structure regardless of your employer. Here is what each section contains:

Section	What it shows	What to check
Gross pay	Total earnings before any deductions	Hours × rate matches. Overtime calculated correctly (1.5x after 40 hrs)
Federal taxes	Federal income tax withheld	Matches your W-4 elections. Too much = big refund (interest-free loan to IRS)
State/local taxes	State income tax, city tax if applicable	Correct state. Some cities (NYC, Philadelphia, Portland) have additional taxes
FICA	Social Security (6.2%) + Medicare (1.45%)	SS stops at $168,600 wage base (2026). Medicare has no cap
Voluntary deductions	401(k), health insurance, HSA, FSA, life insurance	Contribution percentages match your elections. Premium amounts correct

Gross Pay vs Net Pay: Where Your Money Goes

On a $75,000 salary ($2,884.62 per biweekly paycheck), here is a typical breakdown of deductions:

Line item	Amount	What it is
Gross pay	$2,884.62	Your full biweekly earnings
Federal income tax	-$310.00	Based on W-4 elections, 22% bracket
Social Security (6.2%)	-$178.85	OASDI tax, capped at $168,600/yr
Medicare (1.45%)	-$41.83	No income cap. Additional 0.9% above $200K
State income tax	-$115.38	Varies by state (0% in TX, FL, WA — up to 13.3% in CA)
401(k) contribution (6%)	-$173.08	Pre-tax, reduces your taxable income
Health insurance	-$185.00	Your share of premium (employer pays the rest)
HSA contribution	-$82.69	Pre-tax, triple tax advantage
Net pay (take-home)	$1,797.79	62.3% of gross — what hits your bank account

Only 62% of your gross pay actually reaches your bank account. The other 38% goes to taxes, retirement savings, and insurance. Understanding this breakdown is essential for budgeting accurately. Use our take-home pay calculator to see your specific numbers.

Federal Income Tax Withholding

Your employer withholds federal income tax based on your W-4 form elections. The amount depends on your filing status, number of allowances, and any additional withholding you requested. Common issues to watch for:

Too much withheld: If you received a large tax refund last year (over $1,000), you are overwithholding — essentially giving the government an interest-free loan. Adjust your W-4 to reduce withholding and increase your take-home pay. A $2,400 refund means you could have had $200 more per month all year.

Too little withheld: If you owed taxes last year, you are underwithholding. This can trigger IRS penalties. Increase your W-4 withholding or make estimated quarterly payments.

Use our income tax calculator to estimate your tax liability, then adjust your W-4 so your withholding matches.

FICA Taxes: Social Security and Medicare

Social Security (OASDI): 6.2% of your gross pay up to $168,600 (2026 wage base). Your employer also pays 6.2%, totaling 12.4%. Once you earn $168,600 in a calendar year, Social Security withholding stops for the rest of the year — you will see a bump in net pay for your remaining paychecks.

Medicare: 1.45% of all earnings with no cap. Earnings above $200,000 (single) or $250,000 (married) are subject to an additional 0.9% Medicare surtax. Your employer matches the base 1.45% but does not match the surtax.

Together, FICA taxes take 7.65% of your pay — $5,737.50 on a $75,000 salary. Check our Social Security estimator to see what benefits this is building toward.

Pre-Tax vs Post-Tax Deductions

Understanding the difference saves you money:

Deduction type	Examples	Tax benefit
Pre-tax	Traditional 401(k), health premiums, HSA, FSA, commuter benefits	Reduces taxable income. $173 pre-tax 401(k) saves ~$42 in taxes per paycheck at 24% bracket
Post-tax	Roth 401(k), life insurance over $50K, disability insurance, garnishments	No current tax benefit, but Roth grows tax-free

Every dollar contributed pre-tax reduces your current tax bill. At the 22% bracket, a $500/month pre-tax 401(k) contribution only reduces your take-home by $390 because of the $110 tax savings. This makes pre-tax deductions cheaper than they appear. See the impact with our Roth vs Traditional 401(k) calculator.

Common Pay Stub Errors to Watch For

Wrong hours or overtime. Verify your reported hours match your actual time worked. Overtime must be calculated at 1.5x your regular rate for hours over 40/week (federal law). Some states require overtime for hours over 8/day.

Incorrect tax withholding. If you recently moved states, got married, or had a child, your withholding may not reflect the change. File an updated W-4 with HR.

Missing or wrong deductions. Verify your 401(k) percentage matches what you elected. Check health insurance premiums against your enrollment confirmation. If you changed plans during open enrollment, verify the new premiums took effect.

Wrong filing status. If your pay stub shows "Single" but you file as "Married Filing Jointly," you are likely overwithholding. Update your W-4.

Year-to-Date (YTD) Totals: What to Check

The YTD section on your pay stub is your running total for the calendar year. Review these annually (or at least quarterly) to verify that your total gross pay matches your expected annual salary, your 401(k) contributions are on track to max out ($23,500 in 2026), your Social Security withholding stops after reaching the $168,600 wage base, and your health insurance deductions match your plan selections. Your final pay stub of the year should closely match your W-2 form. If they do not match, flag it with HR before tax filing season.

How to Optimize Your Take-Home Pay

Maximize pre-tax deductions: Every dollar in your traditional 401(k), HSA, or FSA reduces your taxable income. At the 22% bracket, $100 pre-tax costs you only $78 in take-home pay.

Right-size your withholding: If you got a large refund, reduce withholding via W-4 to put that money in your paycheck each month instead of waiting for a refund. Use the IRS Tax Withholding Estimator or our calculator.

Use commuter benefits: If your employer offers pre-tax transit or parking benefits ($315/month max in 2026), you save $75-100/month in taxes on your commute costs.

Check for employer HSA contributions: Some employers contribute $500-$1,500/year to your HSA. This is free money — make sure you are enrolled in the HDHP that qualifies you to receive it.