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How to Read Your Paycheck: Understanding Your Pay Stub

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Understanding Your Pay Stub

It might be easy to have your paychecks directly deposited into your bank account, but it’s still crucial to recognize what all those numbers and abbreviations on your pay stubs mean. If you don’t review your paycheck, you might be accidentally losing money due to an accidental, or even intentional, error.

The first step in reading your paychecks involves becoming familiar with the standard financial and tax information that appears on all of them. This information includes the deductions for federal and state taxes, Social Security, Medicare, personal insurance plans and retirement savings. Beyond these deduction codes and numbers, any other proprietary codes used on your pay stubs can be explained by your human resources department. We want to make sure you’re being paid all that you deserve: Here’s a more detailed guide on how to read your paycheck.

The Basic Building Blocks of Paychecks

A pay stub generally lists:

  • Your taxable earnings.
  • Your gross pay, or the total amount of money that you earned that pay period.
  • Your net pay, or the amount of money that you get to take home with you. Your net pay matches the dollar amount listed on the paycheck that you’re so eager to cash.
  • Withholdings for federal taxes, state taxes, Social Security and Medicare, which largely account for the difference between your taxable earnings and net pay.
  • Other benefits like child care payments, retirement contributions and paid time off.

Let’s break it down further in an attempt to help you better manage your money.

Federal Income Taxes

The federal government gets a piece of your income from each and every paycheck. This piece of income is your withholding tax — a partial payment of your annual income taxes that gets sent directly to the government.

The amount of money withheld for federal taxes depends on the amount of money that you earn and the information that you gave your employer when you filled out a W-4 form, or Employee’s Withholding Allowance Certificate.

On a W-4, you can make allowances for yourself, your spouse and your dependents. For 2017, each allowance that you take exempts $4,050 from withholding.

For every allowance you take, less money gets withheld for federal taxes and more money gets added to your paycheck. Take fewer allowances, and a bigger chunk of your income will be withheld for your federal taxes.

State Taxes

Depending on where you live, you may or may not be required to pay a state income tax. As with federal taxes, money for state taxes is withheld from every paycheck.

Social Security

The federal government requires every working American to contribute a portion of their paycheck to Social Security, a system of supplemental retirement programs established in 1935. Every worker contributes 6.2% of their gross income directly into the Social Security fund, and every employer chips in an additional 6.2% for each employee. The Social Security fund provides benefits to current Social Security recipients.


The federal government requires every working American to contribute to Medicare, a U.S. government insurance plan that provides hospital, medical and surgical benefits for Americans ages 65 and older, and for people with certain disabilities. Every worker contributes 1.45% of their gross income to Medicare and every employer pays an additional 1.45% on behalf of each employee.

These federal and state withholdings account for much of the difference between your gross income and net income. There may be other deductions as well, depending on the programs that you sign up for with your employer.


If you signed up for medical, dental or life insurance through your employer, your contributions to these plans will be deducted from your pay as well.

Retirement Savings Plans

Contributions to retirement savings plans such as a 401K plan will also be deducted from your pay. When you sign up for a 401K plan, you select a percentage of your pre-tax salary that you’d like to contribute to your retirement account.

Flexible Spending Accounts

A flexible spending plan allows you to set aside pre-tax dollars for medical expenses including health insurance copayments, deductibles and prescription drugs. Contributions to a flexible spending account are deducted from your pre-tax income.

Health Savings Accounts

A health savings account is another way to put pre-tax dollars aside in a special account for medical expenses. To be eligible for a health savings account, you’ll need to select a high-deductible health insurance plan. Contributions to a health savings account are deducted from your pre-tax income.

Why It’s Important to Track Your Deductions

Each pay stub includes year-to-date fields for each withholding category so you can track how much money you’ve paid for taxes, Social Security and Medicare throughout the year. Many employers include a similar listing for contributions to retirement savings plans and health plans. You’ll generally see these fields marked as the acronym “YTD” on your pay stubs.

It’s important to stay on top of this information. Any errors are your responsibility to find and report to your company’s human resources department. The last you thing you want is for an error to be repeated through several pay periods. If you have questions about any of the information listed on your pay stub, be sure to contact a coworker in human resources.

A pay stub also lists gross and net income to-date. So you’re able to track just how much money you’re making (your gross pay) and how much money you’re actually taking home after taxes and other deductions (your net pay) throughout the year. You can use this information to build a spending plan, work on reducing your debts or start saving for the future.

Be sure to check that the information on your last pay stub of the year matches the information on your W-2 form, which details your wages and taxes paid for the year.

Why It’s Important to Securely Store Your Pay Stubs

Certain employers include your Social Security number, name and address on pay stubs, so consider storing them in a safe place like a locked drawer, or filing cabinet. If you ever think your pay stub — and, consequently your Social Security number — was compromised, consider keeping an eye on your credit for any signs of identity theft. It’s smart to review your credit reports for free once a year at, or view your free credit report snapshot on at any time.

To learn how to get control of your finances and about budgeting best-practices, read more from our experts in our Personal Finance Learning Center.

This article has been updated. It was originally published November 4, 2016.

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Credit Experts

    We are not familiar with those. However, it’s likely that your Human Resources Department can help.

  • Payne

    If I’m paying for Medicare employee tax, does that mean I’m eligible for health coverage?

    • Credit Experts

      No, that is a tax that is used to help fund Medicare for people who are eligible, that is, 65 or older.

  • Gerri Detweiler

    Do you mean Medicare tax? Everyone pays that. You can read more in IRS Tax Topic 751 on their website.

  • Loren

    I am a salaried teacher. Our raise occurred in November and my employer went back to August and changed my contract salary. In previous years we were given retro but now they are dividing retro over our remaining checks. Is this all legal?

    • Credit Experts

      Why would it not be if you receive the amount your contract calls for?

  • Gerri Detweiler

    Not sure – have you asked your employer?

    • connotationsCTold

      Gerri this is easier. A lot of people don’t want to impose. And never ask at certain times of the year such as when the W-2s are getting mailed out or the bills are getting mailed out or when our quarterly tax forms are due.

      • Gerri Detweiler

        I am not sure I understand why someone who gets a paycheck shouldn’t ask their employer if they don’t understand it. It may be a busy time of the year, but that’s when employees get these forms and should make sure they are correct and that they understand them.

        • Tish

          My employer told me they can’t explain my check stub, their Exact words were, “I don’t Know I don’t get a check” -_-

          Mind you sure is the company OWNER.


          • Gerri Detweiler

            It sounds like they have a payroll company prepare them and the payroll company should be able to explain it. – Wow!

        • Tish

          * She * is what I mean to say instead of “sure”

  • nina

    My pay stub, at the very bottom – says “taxable income – 0″…. Anyone know what this means?

    • connotationsCTold

      Sure the number of dependents you clamed is so large or your income is so small you don’t have any income tax held out. It could also mean you’re what’s called contract labor and the accounting department uses the same check for that as normal payroll.

  • Skepticalbuffalo

    Do you live in Arizona? Lots like AZ withholding. That’d be state income tax

  • Gerri Detweiler

    I am not familiar with this. Have you talked to your payroll administrator?

    • connotationsCTold

      Payroll administrator??? Gerri Gads. I’ve done decades of corporate accounting. New York Dues if it’s filled in with a number I assume you’re a member of a union.

      • Gerri Detweiler

        Thanks for clarifying that!

  • sarah

    What is the tax listed as local. It’s located under YTD information, under wages.

    • Gerri Detweiler

      Not sure what kinds of local taxes are charged in your jurisdiction. Have you asked the person who handles payroll for your employer?

    • connotationsCTold

      City is my guess.. New York City was the first as far as I know for a city income tax then another popped in and did it in the same East coast area. I saw a long list of cities once on line recently that hold out income tax and forget where I saw it.

    • pcenemy

      sarah —– can be anything —- in Colorado we have “occupational privilege taxes’ for working in Denver (5.75/mos) or aurora (4/mos); in Philadelphia we withhold school district taxes which vary by district; in several jurisdictions we withhold either city tax (most cities with taxes are back east) —– tell me what city/county you work in and i’ll tell you what it most likely is

  • connotationsCTold

    if by extra work you mean over time please explain that way.

  • connotationsCTold

    because you live in the USA :)

  • connotationsCTold

    try your accounting department normally we have accountants receivable, accounts payable, and payroll humans. some have secretaries also and any of them might know. you should not need anyone that does journal entries or the head of the department.

  • jay easterling

    i have a year to date HSA pre-tax deduction, but then under after-tax adjustments, the same year to date amount is under HSA add-back…does this mean the employer reimbursing that amount?

    • Gerri Detweiler

      Have you tried asking your employer?

    • Laura Newell

      This could be the employer’s contribution to your HSA but you should check with them.

  • Steve

    Why were my SS withholding amount not the same every pay period (Jan – Dec) in 2014? And by September they stopped being taken out all-together.

    • Gerri Detweiler

      Perhaps you exceeded the wage base limit? More information can be found here: Social Security withholding

  • stacy

    why would my company take “adjustments to net pay” out of my year to date after taxes and it being the exact amount of my previous pay check?

    • Credit Experts

      Have you tried asking HR? We don’t know why your company did that.


    What is the TIP Before Tax amount listed in the Pre-Tax Deductions column for?

  • sheena

    my year to date starts out gross, fica,medfica, fed wth, state what is the medfica and fed wth? what spot do they go on my w-2 to file my taxwes

  • Dianne

    Is your contribution to your insurance, health, dental, short or long term disability deductible on your Federal Tax Return?

    • Gerri Detweiler

      Dianne –

      We aren’t able to answer general tax questions. If you need tax help this article may help you find it: The Complete Guide to Finding Tax Help

  • jenn

    after not working for certain company for months i got my w2 online they also have posted all our paystubs. i have one from the end of the year saying make up pay. and then my net pay for that pay stub is over a thousand. does anyone know exactly what this means?

    • Credit Experts

      Your best bet may be to call HR at your former employer to ask. Have you tried that?

  • hihi~~

    What does it mean “Fed Withholding” and “MA Withholding”.
    Fed Withholding showing 0,
    I am from Mass., 0 allowances, single man

    • Gerri Detweiler

      It sounds like those boxes reflect funds withheld for state and federal taxes.

  • Credit Experts

    Jessica —
    You should receive a pay stub — or have access to one online. Your company’s payroll or human resources department should be able to help.

    • Jessica Cortez

      Thank you

  • tiffany

    what does mem hosp mean on my pay stub?

    • Credit Experts

      We don’t know . . . but your company’s HR or payroll department will. Ask and they should be able to help.

  • AbryMama

    Does Net Pay Allocation mean that is how much my check will be and where it will be? ( I can view my stubs online before my check has even been deposited and I am confused)

    • Credit Experts

      Sounds like it, but it is always best to check. The number you are looking for is “net direct deposit.” They are often the same, but a pay allocation can also refer to withholding for child support or garnishment.

  • devon

    If your employer wasn’t taking medical or dental expenses out your pay check for over 4 months. Is the employer allowed to take 80% of your check to pay this with it not being your fault at all?

    • Credit Experts

      Devon —
      What state are you in?

  • IB_Sonny

    What does “federal taxable wages this period” mean. This is the first time its showed up on my pay stub.

    • Credit Experts

      Those are the part of your earnings you have to pay federal tax on. Let’s say you make $500 per pay period (your total earnings) but you put $50 per pay period into a 401(k) retirement plan, which is tax-deferred, meaning you pay no taxes on it until you take it out. In that case, your federal taxable wages would be $450 ($500 minus the untaxed retirement contribution). Hope that helps.

  • A.Say5

    As primarily a waitress for 8 years with my most recent employer it would be odd to get paychecks but i always kept my paystubs and clock out slips that showed similar information – hours worked (shiftly, weekly, & pay period) plus tips reported, tips paid out (to the bartender or busser), & sales (averaged & shiftly) it wasn’t until last year, maybe 2013 (i’m looking for my last paystub without this) that a TIP CREDIT is listed under Earnings but I never saw any extra income other than what I was being paid hourly & my tips. We never received any notification of a change with our paychecks/stubs until we noticed the change ourselves and I looked it up online and only see information where its for employers to be able to get money back on their business tax returns. I don’t understand why they are able to claim it as a credit for themselves & make it out to be income for the tipped employees. I am very confused with this. I believe it messed with my tax refunds for 2013 & now 2014s as well as for other employees that need any type of government assistance those looking at our paystubs read it as income as well but it isn’t, they say its just where the employer doesn’t have to pay the $7.25 minimum wage and can continue to pay $2.13/hr because the tip credit amount is what makes us average at least the $7.25. If the employer only pays us the $2.13 because we are fortunate to have made enough average tips to push us over the $7.25 minimum wage why can they claim a tax credit on our income as well as show it like extra income on the employee?

    • J Lindenmuth,

      Check your pay stub to make sure that your employer is recording your tips. The Tip Credit could actually mean that they are making an assumption about your tips to get from the $2.13 to $7.25. The FICA Tip Credit (which is what you found online), is different, and is typically not shown on the pay stub.

  • abc

    HI, my mother requested payroll info from her employer which listed the following deductions and we can’t figure out what most of them mean. Does anyone know? She resides & works in Philadelphia, PA for a Doctor who pays her through personal checks and her yearly W2’s are done by a CPA.

    Fica & Medicare
    FWT (Is this Federal withholding tax?)
    CWT (City withholding tax?)
    Dental Reimb (Does this mean she has dental insurance coverage through her employer? because, as she states, she has never had dental coverage through her employer)

    Any help is appreciated. Thank you.

    • J Lindenmuth,

      > Fica & Medicare – social security and medicare tax

      > FWT (Is this Federal withholding tax?) — yes
      > PAWT — PA Withholding Tax
      > CWT (City withholding tax?) — Most likely the Philadelphia local withholding
      > PUC — This is either Pennsylvania Unemployment insurance (most likely), or Personal Use of (Company) Car (less so)
      > Dental Reimb (Does this mean she has dental insurance coverage through her employer? because, as she states, she has never had dental coverage through her employer) — It depends. She can be reimbursed for dental expenses even without insurance. If this is a negative amount, then it’s a reimbursement that adds to her check. If it is a positive value, then maybe she was incorrectly reimbursed in the prior year and this amount reversed it. Of all the deductions, this would be the one that she should ask her employer about.

  • J Lindenmuth,

    These are most likely PA local codes. 2904 is an old internal PA code for Greencastle. This is probably an income tax. I don’t have a record for what municipality 4708 is located with, but this is likely an LST tax (and is most likely a small amount, like $1, $2, or $10).

  • Doug

    Functionally an employer contribution is neither. It doesn’t lower or increase the employee’s taxes and where it shows up on a pay stub just depends on where your pay stub is set up to show memo lines that have zero tax impact.

  • Russ

    What is the rate for State Witholding taxes in CA? There’s a small amount deducted from my paycheck every 2 weeks and I can’t figure out the exact rate. Is it variable?

    • J Lindenmuth,

      Yes. State withholding taxes are typically calculated by tax tables that are relatively complex, and incorporate your income, filing status (i.e. single or married), number of dependents, and sometimes other factors.

      For example, in California the tax rate can start as low as 1.1% (if you file as a single filer and income is below $7,749 per year), to as high as 14.63% for incomes above $1,100,000. However, there is not an exact rate that they withhold, which is why you would need to refer to a tax table (CA’s is here:, or a tax calculator (such as, to determine if your taxes are being withheld correctly.

  • becca

    Does any on know what -cs mean on my check. Stub is that child support????

    • J Lindenmuth,

      Is this a deduction, or a tax? If it’s a deduction, it could mean just about anything – most payroll systems allow employers to set up as many deductions as they want, with any description they choose. Child support is a possibility. I’d suggest asking your supervisor or payroll person.

  • ReGina

    How do they determine the amount of income taxes taken from a paycheck?

    • Credit Experts

      It comes from the information you put on your w-4 form when you started work, if you are a regular employee. If you freelance, they likely withhold nothing at all, and all tax payment is your responsibility. Here is a link to the w-4 form:

    • GGGGG
      If you go to the bottom of that page you’ll find tables that explain how your allowances lead to deductions and how the left over amount is taxed according to the information given on the w-4

  • Michelle Hinton

    What does CSSC MEAN on a payroll deduction?

    • J Lindenmuth,

      This could be Child Support South Carolina. If you are not paying child support, then check with your company’s payroll administrator … there’s no standard descriptions for payroll deductions, so it really could be anything.

  • Tricia

    My employer “by mistake” took all the employees 401k contributions out of our net instead of gross. When someone finally caught it, it had been going on for months. When asked about it, she corrected it but told us the accountant said, “it was no big deal” we just got it back in taxes at the end of the year. Of course I called the accountant as well and it seemed to me it was all a scramble to make things seem they were above board. I still think that in some way we got screwed.

  • margaret

    What does Exempt

    • Credit Experts

      Could you send us a little more of your question?

  • jaime pesina

    What does achbr mean?

  • Mbakey

    What is the maximum payout?

    • Credit Experts

      What do you mean?

      • Mbakey

        The max. Amount SS pays to highest earners

        • Gerri Detweiler

          For 2015, the maximum amount of taxable earnings is $118,500. Is that what you are asking?

          • Mbakey

            No, the max amt a person would get Fromm SS. Thanks for the patience. I was a high earner and met the max deduction by April or May. I understand that part.

          • Gerri Detweiler

            If you are going to start collecting Social Security I highly recommend reading Laurence Kotlikoff. His books and software program are highly regarded for helping individuals navigate Social Security and maximize benefits.

  • David

    How many OASDI deductions are in one NJ pay check and how many Medicare deductions are there in one NJ pay checks also?

    • J Lindenmuth,

      There will typically only be 1 OASDI (social security) deduction and one Medicare deduction, regardless of state. However, employers can break these up into multiple deductions if they choose (for example, some payroll systems will break out Medicare taxes on wages over $200,000 because the tax rate is different at that level).

  • Violeta Piñon Rivas

    My pay stub says 401k Er Match and it gives me an amount for this pay period and a year to date, then it has a 401k wages and has a higher amount what does 401k wages mean?

    • J Lindenmuth,

      It could be one of 2 things – either it’s the amount you had deducted from your paycheck towards your 401k, or it’s your taxable wages that qualify for the 401k match. If you don’t contribute to a 401k, then it’s your taxable wages.

  • Nehemiah C Cruz

    my pay check says i get paid tips but i do not get any tips

    • Gerri Detweiler

      Have you talked with your employer or payroll company? I’d suggest you start there to clarify it.

  • aj

    why am I paying fit, fica and social security? I live in texas

    • J Lindenmuth,

      Those are the 3 primary federal taxes withheld on paychecks. Texas has no state income taxes, but all federal taxes still apply.

  • Chris.z

    What is PA LLSOU-Buc L & PA LSHPT- Buc In tax

  • lloydN

    why my tax deductions increase on my last pay check??? aren’t those deductions suppose to be the same for every check?

    • Credit Experts

      Ask your human resources department. From the information you gave us, we cannot tell you.

  • Tim

    I worked on prevailing wage job five years ago it was certified payroll.
    My employer deducted fringe benefits from my paycheck twenty dollars per hour but never deposited anything into my retirement account.
    What can I do if anything.

  • Barbara

    Don’t forget FICA!!.. It’s also deducted from the paycheck as well. The dollar amount coming out of my paychecks are outrageously priced!!

  • April

    My pay stub had “stock perch” and “Co STK CONT” anybody knows what that means??

  • Michael

    Anyone know what “RETROLTD” means? I’ve been with the same company for like 12 years, this week they deducted $53 for RETROLTD, first time I’ve seen it in my life.

    • Gerri Detweiler

      Could it be for long term disability insurance, retroactively? Have you asked your employer?

      • Michael

        When I go in this afternoon, I intend to. The new store manager just made a lateral move from another company, so he probably knows less about our HR department than I do. I’ll probably need to get their number and call them.

        • Gerri Detweiler

          Let us know – I am sure other readers will be interested in the answer.

  • sammy

    Does anyone know what PS deduction on your pay stib stands for

  • KP DieDaily Taylor Cgmg

    What does hb regular and hb overtime mean on a pay stub,,?

    • Josh Lindenmuth

      You’ll need to ask your payroll administrator or supervisor. HB could be a code for an internal department, a job that you work on, a location in the company, or just about anything. For example, it could stand for Hostess / Busser (i.e. a non-tipped position at a restaurant).

  • Tony b

    What does food h ins mean

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