How to Read a Paystub: Every Line Item Explained

Your paystub contains critical information about your earnings, taxes, and benefits, but most people never learn to read it properly. Understanding every line item on your pay stub helps you catch payroll errors, which affect 1 in 6 employees annually according to the IRS. It also helps you verify tax withholdings, track year-to-date earnings, and prepare for major financial decisions like loans or tax filing. Here’s how to decode every section.

The Quick Answer

Every paystub breaks down into 5 essential sections:

1. Personal Information – Your name, address, SSN (last 4 digits), employee ID
2. Pay Period Details – Start date, end date, pay date, check number
3. Earnings – Gross pay (before deductions), broken down by type
4. Deductions – Federal tax, state tax, FICA (Social Security + Medicare), voluntary deductions
5. Year-to-Date (YTD) Totals – Cumulative earnings and deductions from January 1st

The one number that matters most: Net pay, also called take-home pay, equals Gross pay minus Total deductions. This is what hits your bank account.

Missing information or seeing unfamiliar deductions? You have the right to ask your employer to explain every line item on your paystub.

Paystub Anatomy: The Complete Breakdown

Section 1: Header Information

The top of your paystub identifies who you are and who’s paying you:

Employer Details:

• Company name, address, and Employer Identification Number (EIN)
• The EIN is the business equivalent of a Social Security Number. Every legitimate employer has one.

Employee Details:

• Your full name and address
• Last 4 digits of your Social Security Number (XXX-XX-1234)
• Employee ID (internal company identifier)

Why it matters: This information proves employment and income for loan applications, apartment rentals, and government benefit verification. If your address is wrong, your W-2 might get mailed to the wrong location in January.

Security note: Paystubs should NEVER show your full Social Security Number. If yours does, request your employer update to a last-4-digits-only format to reduce identity theft risk.

Section 2: Pay Period and Payment Date

This section shows the time frame for your earnings:

Pay Period Start/End: The first and last day you worked during this pay cycle. For example, “12/15/2024 to 12/28/2024” means this paystub covers 14 days of work.

Pay Date: When you actually receive the money (direct deposit date or check date). Federal law doesn’t mandate how soon after the pay period ends you must be paid, but most states require payment within a certain number of days.

Check Number: Unique identifier for this payment. Even with direct deposit, employers usually assign check numbers for internal tracking.

Common pay periods:

• Weekly: 52 paychecks per year
• Bi-weekly: 26 paychecks per year (every other week)
• Semi-monthly: 24 paychecks per year (twice per month, usually on the 1st and 15th or the 15th and 30th)
• Monthly: 12 paychecks per year

Why it matters: Pay periods determine overtime calculations. Under federal law (FLSA), overtime is based on the workweek, not the pay period. If you work 45 hours one week and 35 the next in a bi-weekly pay period, you’re entitled to 5 hours of overtime pay even though the total is 80 hours.

Section 3: Earnings (Gross Pay)

This is where your paycheck starts, before any deductions. Earnings are typically broken down by type:

Regular Pay:

• For hourly workers: Hours worked times hourly rate
• For salaried workers: Annual salary divided by number of pay periods

Example (hourly):

Description         Rate        Hours      Amount
Regular Pay        $25.00/hr    80.00      $2,000.00

Example (salary):

Description                            Amount
Salary (Annual: $60,000 ÷ 24)        $2,500.00

Overtime Pay: For non-exempt employees, any hours over 40 in a workweek must be paid at 1.5 times the regular rate.

Description         Rate        Hours      Amount
Overtime Pay       $37.50/hr    5.00       $187.50

Additional Earnings:

• Bonus: One-time or periodic performance bonuses
• Commission: Sales-based compensation
• Tips: Reported tip income (service industry)
• Shift Differential: Extra pay for night/weekend shifts
• Holiday Pay: Premium pay for working holidays
• PTO Payout: Cashed-out vacation or sick time

Gross Pay Total: The sum of all earnings before deductions. This is your taxable income, with some exceptions like pre-tax benefit deductions.

Why gross pay matters:

• It’s what loan applications ask for when they say “annual income”
• It’s the basis for calculating all percentage-based deductions
• It must match your year-end W-2 form, specifically Box 1 for taxable wages

Section 4: Deductions (Where Your Money Goes)

This is the most complex section and where most people get confused. Deductions fall into three categories:

Mandatory Federal Deductions

1. Federal Income Tax Withholding

Your employer estimates your tax liability based on your W-4 form and withholds it from each paycheck. The amount depends on:

• Your filing status (single, married, head of household)
• Number of dependents claimed
• Any additional withholding you requested
• Your income level (progressive tax brackets)

Typical paystub display:

Federal Tax       Current: $440.00    YTD: $5,280.00

How to verify: Use the IRS Tax Withholding Estimator at IRS.gov to check if you’re withholding the right amount. If you owe a large amount in April or get huge refunds, adjust your W-4.

2. Social Security Tax (FICA)

Fixed rate: 6.2% of gross pay

2024 wage base limit: $168,600. Once you earn this much in a year, no more Social Security tax is withheld.

Example:

Social Security   Current: $124.00    YTD: $1,488.00

This funds your future Social Security retirement and disability benefits. Your employer matches this amount by paying another 6.2% on top of your withholding.

3. Medicare Tax (FICA)

Fixed rate: 1.45% of all gross pay with no income limit.

High earners pay an additional 0.9% Medicare surtax on wages over $200,000 for single filers or $250,000 for married filers.

Example:

Medicare          Current: $29.00     YTD: $348.00

Like Social Security, your employer matches the 1.45%, but not the 0.9% surtax, which is employee-only.

FICA Total: Social Security plus Medicare equals 7.65% of your gross pay for most workers.

State and Local Deductions

State Income Tax:

Rates vary dramatically by state:

• No state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming (0%)
• Low tax states: North Dakota (2.9%), Pennsylvania (3.07%), Indiana (3.23%)
• High tax states: California (up to 13.3%), New York (up to 10.9%), New Jersey (up to 10.75%)

Our paystub generator includes approximate rates for all 50 states.

Local/City Taxes:

Some cities impose additional income taxes:

• New York City: approximately 3 to 4% of income
• Philadelphia: approximately 3.8%
• San Francisco: Payroll expense tax (paid by employer)

State Disability Insurance (SDI):

Required in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico. Typical rate: 0.5 to 1.2% of gross pay.

Voluntary Deductions (Pre-Tax vs Post-Tax)

Pre-Tax Deductions reduce your taxable income:

401(k) or 403(b) Contributions:

401(k) (5%)       Current: $100.00    YTD: $1,200.00

This reduces your federal and state income tax burden now, but withdrawals in retirement are taxed.

Health Insurance Premiums:

Health Ins        Current: $150.00    YTD: $1,800.00

Employer-sponsored health insurance premiums are usually pre-tax, reducing both income tax and FICA.

HSA or Health Savings Account:

HSA               Current: $200.00    YTD: $2,400.00

This has a triple tax advantage: pre-tax contribution, tax-free growth, and tax-free withdrawals for medical expenses.

Flexible Spending Account (FSA):

FSA - Medical     Current: $125.00    YTD: $1,500.00

“Use it or lose it” account for predictable medical expenses.

Dependent Care FSA:

FSA - Childcare   Current: $416.67    YTD: $5,000.00

Pre-tax account for childcare expenses with a 2024 limit of $5,000.

Post-Tax Deductions are taken after taxes are calculated:

Roth 401(k): Unlike traditional 401(k), Roth contributions are post-tax. You pay taxes now but withdrawals in retirement are tax-free.

Union Dues:

Union Dues        Current: $45.00     YTD: $540.00

Wage Garnishments: Court-ordered deductions for child support, tax liens, student loan defaults, or creditor judgments. These are involuntary post-tax deductions.

Life/Disability Insurance: Supplemental coverage beyond employer-provided basics is often post-tax.

Section 5: Net Pay (Your Take-Home)

The bottom line: Gross Pay minus Total Deductions equals Net Pay.

This is the amount deposited into your bank account or the check amount.

Typical paystub display:

GROSS PAY:                           $2,000.00

TOTAL DEDUCTIONS:                    -$587.50
  Federal Tax:          -$440.00
  State Tax (CA):       -$186.00
  Social Security:      -$124.00
  Medicare:             -$29.00
  401(k):               -$100.00
  Health Insurance:     -$150.00

NET PAY:                             $1,412.50

The 70 to 80% rule: For most employees, net pay is 70 to 80% of gross pay. If yours is significantly lower, review your deductions. You might be over-withholding or enrolled in expensive benefits.

Section 6: Year-to-Date (YTD) Summary

YTD columns show cumulative totals from January 1st through the current pay date.

Why YTD matters:

1. W-2 Verification: Your YTD gross pay should match Box 1 for Wages on your W-2 in January. If it doesn’t, contact payroll immediately.

2. Tax Planning: Track if you’re on pace to hit tax bracket changes or contribution limits.

3. Social Security Cap: Once YTD gross hits $168,600 (the 2024 limit), Social Security withholding stops for the year.

4. 401(k) Limits: Track progress toward annual contribution limits: $23,000 for 2024, or $30,500 if age 50 or older.

5. Income Verification: Lenders often ask for YTD income when evaluating loan applications.

Example YTD section:

YEAR-TO-DATE SUMMARY (as of 12/31/2024)
YTD Gross Pay:              $52,000.00
YTD Federal Tax:            -$11,440.00
YTD State Tax:              -$4,836.00
YTD Social Security:        -$3,224.00
YTD Medicare:               -$754.00
YTD Net Pay:                $31,746.00

Pro tip: Save your final paystub of the year. It serves as a backup if your W-2 gets lost or contains errors.

Understanding Tax Withholding: The W-4 Connection

Your W-4 form (Employee’s Withholding Certificate) determines how much federal tax is withheld from each paycheck. The 2024 W-4 uses these inputs:

Filing Status:

• Single
• Married filing jointly
• Head of household

Multiple Jobs or Spouse Works: If you have multiple jobs or file jointly with a working spouse, additional withholding may be needed to avoid underpayment.

Dependents: The number of dependents affects your tax credits, reducing withholding.

Other Income/Deductions: Report non-wage income (interest, dividends) or deductions (mortgage interest, student loans) to fine-tune withholding.

Extra Withholding: Request additional dollar amount withheld per paycheck (popular with self-employed side hustlers).

How to Check Your Withholding

Step 1: Use the IRS Tax Withholding Estimator at IRS.gov. Step 2: Gather your most recent paystub (shows YTD income and withholding). Step 3: Input your expected annual income, deductions, and credits. Step 4: The tool calculates if you’re withholding too much or too little.

If withholding is off: Submit a new W-4 to your employer’s HR/payroll department. You can adjust your W-4 anytime during the year.

When to re-check withholding:

• You get married or divorced
• You have a baby
• You buy a house (mortgage interest deduction)
• You start a side business (additional income)
• Tax laws change (new rates, standard deduction amounts)

State-by-State Tax Rates (Quick Reference)

Our paystub generator includes these approximate state income tax rates:

State	Rate	State	Rate	State	Rate
AK	0%	KY	5.0%	OH	3.99%
AL	5.0%	LA	4.25%	OK	5.0%
AR	5.5%	MA	5.0%	OR	9.0%
AZ	4.5%	MD	5.75%	PA	3.07%
CA	9.3%	ME	7.15%	RI	5.99%
CO	4.4%	MI	4.25%	SC	7.0%
CT	6.99%	MN	6.8%	SD	0%
DE	6.6%	MO	5.3%	TN	0%
FL	0%	MS	5.0%	TX	0%
GA	5.75%	MT	6.75%	UT	4.95%
HI	8.25%	NC	4.99%	VA	5.75%
IA	6.0%	ND	2.9%	VT	6.75%
ID	5.8%	NE	6.84%	WA	0%
IL	4.95%	NH	0%	WI	6.27%
IN	3.23%	NJ	8.97%	WV	6.5%
KS	5.7%	NM	5.9%	WY	0%
		NV	0%
		NY	6.85%

Note: These are base rates. Actual withholding depends on income level and filing status. States like California have progressive brackets with top rates exceeding 13% for high earners.

Common Paystub Errors (And How to Spot Them)

Payroll mistakes affect 1 in 6 employees annually according to the American Payroll Association. Here’s what to watch for:

1. Incorrect Hours or Overtime

Red flags:

• Regular hours don’t match your timecard
• Overtime hours missing: you worked 45 hours but paystub shows 40 regular, 0 overtime
• Overtime paid at wrong rate (should be 1.5× regular rate)

How to catch it: Compare paystub hours to your personal time tracking (digital or written). If there’s a discrepancy, provide your records to payroll.

Legal note: Under FLSA, you must keep your own time records as backup. Employers are required to keep accurate records, but having your own records protects you in disputes.

2. YTD Totals Don’t Add Up

Red flags:

• Current period gross pay + previous YTD ≠ new YTD
• YTD amounts decrease (should only increase)
• December YTD doesn’t match January W-2

How to catch it: Keep all paystubs in chronological order. Before filing taxes, verify your final paystub YTD matches your W-2 Box 1 (wages).

If they don’t match: Contact payroll before filing taxes. If your employer doesn’t correct it, file Form 4852 (Substitute for W-2).

3. Tax Withholding Doesn’t Match W-4

Red flags:

• Your filing status changed (got married) but withholding stayed the same
• You claimed dependents on W-4 but withholding didn’t decrease
• Federal tax is zero despite earning above the standard deduction threshold

How to catch it: Use the IRS Tax Withholding Estimator quarterly. If your projected tax liability differs significantly from YTD withholding, something’s wrong.

Common cause: You submitted a new W-4 but payroll didn’t update the system. Follow up to confirm they received and processed it.

4. Missing or Unexplained Deductions

Red flags:

• A deduction appears that you didn’t authorize
• Benefits deductions don’t match your enrollment paperwork
• Deductions for “equipment” or “uniforms” that reduce you below minimum wage

How to catch it: Review every deduction on your paystub. If you don’t recognize it, ask HR to explain it in writing.

Legal note: Employers can’t deduct for cash register shortages, customer walkouts, broken equipment, or uniforms if it drops your pay below minimum wage (federal rule; some states are stricter).

5. Social Security Withholding Continues After Wage Base

Red flag: You’ve earned over $168,600 YTD (2024 limit), but Social Security tax is still being withheld.

How to catch it: Check your December paystub. Once YTD gross hits the wage base, Social Security withholding should stop. Medicare continues with no cap.

What to do: Alert payroll immediately. Over-withheld FICA must be refunded by your employer or claimed on your tax return (Form 843).

6. Incorrect Pay Rate

Red flags:

• Hourly rate on paystub doesn’t match your offer letter or last raise
• Salary amount doesn’t divide correctly (annual salary ÷ pay periods)
• Commission percentage is wrong

How to catch it: Keep copies of all employment agreements, offer letters, and raise notifications. Compare the stated rate to paystub calculations.

Documentation is key: In disputes, written confirmation of your rate beats verbal agreements.

Pre-Tax vs Post-Tax: Why Order Matters

The sequence of deductions significantly affects your take-home pay and tax liability. Here’s the order payroll systems follow:

Step 1: Start with Gross Pay All earnings before any deductions.

Step 2: Subtract Pre-Tax Deductions 401(k), health insurance, HSA, FSA, transit benefits, etc. Result: Taxable Gross Pay is lower than actual gross.

Step 3: Calculate FICA Taxes Social Security (6.2%) + Medicare (1.45%) on taxable gross

Step 4: Calculate Federal Income Tax Based on taxable gross, W-4 elections, and current tax tables

Step 5: Calculate State/Local Income Tax Based on taxable gross and state-specific rules

Step 6: Subtract Post-Tax Deductions Roth 401(k), union dues, garnishments, post-tax insurance

Step 7: Net Pay What’s left is deposited to your account

Example: Why Pre-Tax Matters

Scenario: $5,000 gross pay, $200 health insurance

With Pre-Tax Health Insurance:

Gross Pay:                    $5,000.00
Pre-Tax Health Insurance:       -$200.00
Taxable Gross:                $4,800.00

FICA (7.65%):                   -$367.20
Federal Tax (22% est):        -$1,056.00
State Tax (5% est):             -$240.00

Net Pay:                      $3,136.80

With Post-Tax Health Insurance:

Gross Pay:                    $5,000.00
Taxable Gross:                $5,000.00

FICA (7.65%):                   -$382.50
Federal Tax (22%):            -$1,100.00
State Tax (5%):                 -$250.00
Post-Tax Health Insurance:      -$200.00

Net Pay:                      $3,067.50

Difference: $69.30 per paycheck ($1,800/year)

Pre-tax benefits reduce your taxable income, lowering your overall tax burden. This is why employer-sponsored health insurance and traditional 401(k)s are so valuable.

Year-to-Date (YTD) Tracking: Why It’s Critical

YTD figures are more than just running totals. They’re essential for financial planning and compliance.

What to Track Throughout the Year

1. YTD Gross Pay vs Annual Salary

If you’re salaried, verify: Annual salary ÷ Number of pay periods × Pay periods so far = YTD gross (approximately)

Example: $60,000 salary, bi-weekly (26 pay periods), currently pay period 20: Expected YTD: $60,000 ÷ 26 × 20 = $46,153.85

If your YTD is significantly different, investigate unpaid time off, raises, or payroll errors.

2. YTD Federal Tax vs Estimated Liability

Run the IRS Tax Withholding Estimator quarterly. Compare YTD federal tax withheld to projected annual liability.

If you’re over-withholding: You’re giving the government an interest-free loan. Adjust your W-4 to reduce withholding.

If you’re under-withholding: You’ll owe tax in April plus possible underpayment penalties. Increase withholding or prepare to pay.

3. YTD 401(k) Contributions vs Annual Limit

2024 limits:

• Employee contributions: $23,000, or $30,500 if age 50 or older
• Total (employee plus employer): $69,000, or $76,500 if age 50 or older

If you’re maxing out, track YTD to ensure you hit the limit by December. If you max out early (such as in October), you lose employer match for remaining pay periods unless your plan allows a “true-up.”

4. YTD Social Security vs Wage Base

Once YTD gross hits $168,600 in 2024, Social Security withholding should stop. If you have multiple jobs, you may over-pay FICA. Claim a refund on your tax return using Form 1040, Schedule 3.

5. YTD Net Pay vs Budget

Your YTD net pay shows actual take-home income for the year. Compare it to your budgeted spending:

If YTD Net Pay < YTD Expenses: You’re spending more than you earn and going into debt. If YTD Net Pay > YTD Expenses: You’re building savings.

This reality check is more accurate than estimating from gross salary.

Self-Employed and 1099 Contractors: The Paystub Difference

Independent contractors and self-employed individuals don’t receive traditional paystubs because there’s no employer withholding taxes. Here’s what changes:

No Withholding, Big Tax Bill

W-2 Employees: Taxes are withheld automatically from each paycheck. 1099 Contractors: You receive full payment. You’re responsible for paying taxes quarterly.

Self-employment tax: 15.3% of net earnings, which covers both sides of FICA (employee 7.65% plus employer 7.65%).

Estimated quarterly taxes: Due April 15, June 15, Sept 15, and Jan 15 using Form 1040-ES.

Consequences of not paying quarterly: Underpayment penalties, large tax bill in April, and potential IRS payment plans.

Creating Your Own Paystub Record

Even without an employer, you should document your income:

Option 1: Use our paystub generator to create records of 1099 payments received. Enter your business name as the “employer” and your own name as the “employee.”

Option 2: Maintain a spreadsheet:

• Date received
• Payer name
• Gross amount
• Estimated tax set aside (25-30% is typical)
• Description of services

Why document it: Mortgage lenders, landlords, and financial institutions often request proof of income. While 1099 forms and tax returns are standard proof, paystubs or payment records provide supplementary documentation.

Legitimate Uses for Self-Employed Paystubs

1. Income verification for apartments: Some landlords accept self-employment paystubs alongside bank statements and 1099 forms.

2. Personal record-keeping: Track income and estimated tax payments throughout the year to avoid surprises.

3. Divorce or child support: Courts may require income documentation; self-created paystubs with corresponding bank deposits serve as proof.

Note: Paystubs must reflect actual income received. Creating false documentation is fraud.

Legal Requirements: What Employers Must Provide

Paystub laws vary dramatically by state. Here’s the breakdown:

States Requiring Paystubs (41 Plus DC)

Most states mandate employers provide paystubs in some form:

Access States: Employers must make paystubs available in electronic or print form but don’t have to automatically distribute them.

Access + Print States: Employees must be able to print paystubs, even if delivered electronically. This includes California, Colorado, Connecticut, Hawaii, Iowa, Maine, Massachusetts, New Mexico, North Carolina, Texas, and Vermont.

Automatic Delivery States: Employers must proactively deliver paystubs with each paycheck. This is the most common requirement.

States With NO Paystub Requirement (9 States)

Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Ohio, South Dakota, Tennessee

Best practice: Even in states without legal requirements, employers should provide paystubs. They protect both employer and employee by documenting wages, hours, and deductions.

Required Information (When Mandated)

Most states requiring paystubs mandate they include:

• Employer name, address, and EIN
• Employee name and last 4 digits of SSN
• Pay period start and end dates
• Payment date
• Hours worked (for non-exempt employees)
• Rate of pay
• Gross wages
• All deductions (itemized with clear descriptions)
• Net pay
• Year-to-date totals for gross, deductions, and net

State-specific additions:

• California: Sick leave balance, hourly rate for each pay rate if multiple
• New York: Rate and hours for each rate if employee has multiple pay rates
• Massachusetts: Earned sick time balance

Electronic vs Paper Paystubs

General rule: Electronic paystubs are allowed in most states if:

1. Employee consents, with written consent required in some states
2. Employee can access paystubs 24/7
3. Employee can print paystubs at no cost to them
4. Delivery is secure through encrypted email or password-protected portal

Paper paystub states: Some states require paper paystubs unless employees opt into electronic delivery. Alaska, Hawaii, and Montana require opt-in.

Employer best practices:

• Offer both paper and electronic options
• Never charge employees to access paystubs
• Maintain paystub access for at least 3 years (DOL requirement)
• Use secure delivery methods and never send full SSN via unencrypted email

How to Use Your Paystub for Financial Planning

Beyond verifying accuracy, your paystub is a powerful financial planning tool:

1. Calculating True Hourly Rate

For salaried employees: Your paystub shows how much you actually earn per hour after accounting for overtime and actual hours worked.

Formula: YTD Net Pay divided by YTD Hours Worked equals True Hourly Rate.

Example: $50,000 annual salary, work 50 hours/week, 50 weeks/year = 2,500 hours YTD Net Pay: $35,000 (after taxes/deductions) True Hourly Rate: $35,000 ÷ 2,500 = $14/hour

Suddenly that $50K salary doesn’t look as impressive when you’re working 50-hour weeks.

2. Maximizing Retirement Contributions

Use YTD tracking to ensure you’re maximizing 401(k) contributions:

Goal: Contribute $23,000 in 2024. Current: YTD contributions $12,000 through June. Analysis: On track (50% of year, 52% of goal).

Adjustment: If behind, increase contribution percentage. If ahead and maxing out early, beware of losing employer match for later pay periods.

3. Tax Refund vs Tax Owed Planning

Big refunds mean bad financial planning. You’re letting the government hold your money interest-free.

Ideal scenario: Owe or receive $0 to $500 at tax time.

How to adjust: Compare YTD federal tax withheld to estimated liability using IRS estimator. If withholding too much, submit new W-4 with higher allowances.

4. Emergency Fund Calculation

Your net pay determines emergency fund size.

Standard advice: 3 to 6 months of expenses Better metric: 3 to 6 months of net pay

Calculation from paystub: Net pay per period: $2,500 Pay periods per month: 2.17 (26 annual ÷ 12) Monthly net: $2,500 × 2.17 = $5,425 6-month emergency fund: $5,425 × 6 = $32,550

This is more accurate than using gross salary because it accounts for actual money available to you.

5. Debt-to-Income Ratio for Loans

Lenders use gross income for DTI calculations, but you should use net pay for realistic affordability.

Lender’s view (using gross): Gross monthly income: $5,000 Max mortgage payment at 28% DTI: $1,400

Your reality (using net): Net monthly income: $3,500 Max mortgage payment at 28% of net: $980

Planning with net income prevents you from becoming “house poor.”

Frequently Asked Questions

Q: What’s the difference between gross pay and net pay?

Gross pay is your total earnings before any deductions. It’s what you “made” on paper. Net pay is your take-home amount after federal tax, state tax, FICA (Social Security and Medicare), and any voluntary deductions like health insurance or 401(k). For most employees, net pay is 70 to 80% of gross pay.

Q: Why is my net pay less than 70% of gross?

If your net pay is significantly below 70% of gross, you may be over-withholding taxes, enrolled in expensive benefits, or have wage garnishments. Use the IRS Tax Withholding Estimator to check if you’re withholding too much federal tax. Review your deductions section carefully: high health insurance premiums, large 401(k) contributions, or court-ordered garnishments all reduce take-home pay.

Q: Can my employer refuse to give me a paystub?

It depends on your state. 41 states plus DC require employers to provide paystubs either automatically or upon request. Nine states (Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Ohio, South Dakota, and Tennessee) have no paystub requirements, though it’s still best practice. Check your state’s labor department website for specific requirements.

Q: How long should I keep old paystubs?

Keep paystubs for at least one year, but ideally three years to match IRS audit timelines. Save your final paystub of each year permanently because it serves as a backup if your W-2 gets lost or contains errors. Store them digitally in encrypted cloud storage or a password-protected folder.

Q: What should I do if I find an error on my paystub?

Contact your payroll department immediately with documentation: your timecard, previous paystubs showing correct information, or your employment agreement. Provide specific details about the error (missing hours, wrong rate, or incorrect deduction amount). Keep a paper trail by following up verbal conversations with email confirmation. If the error affects your tax withholding, request a corrected paystub for your records.

Free Paystub Generator for Record-Keeping

Need to create paystubs for legitimate documentation? Our paystub generator helps employers and self-employed individuals create professional paystubs instantly.

Features:

• Automatic federal and state tax calculations for all 50 states
• FICA computation (Social Security plus Medicare)
• Year-to-date tracking
• Pre-tax deductions (401k and health insurance)
• Professional PDF download
• Hourly and salary pay types
• Overtime calculations (1.5× rate)

Legitimate uses:

• Small business owners documenting employee payments
• Self-employed contractors creating income records
• Household employers (nannies, caregivers) providing paystubs
• Record-keeping for actual payments made or received

Use this tool to document actual payments only.

Key Takeaways

Understanding your paystub protects your financial interests and helps you plan effectively:

Immediate Actions:

1. Compare paystub hours to your timecard every pay period
2. Verify YTD totals match previous paystub + current period
3. Check that your filing status and W-4 are up to date
4. Save all paystubs digitally (encrypted folder or cloud storage)
5. Review deductions and ask HR to explain anything unclear

Annual Tasks: 6. Compare December YTD gross to January W-2 Box 1. 7. Use IRS Tax Withholding Estimator to optimize W-4. 8. Track YTD 401(k) contributions vs annual limits. 9. Verify Social Security withholding stops after wage base ($168,600). 10. Store final paystub of year as W-2 backup.

Long-Term Financial Health: 11. Calculate true hourly rate (net pay ÷ hours) to evaluate job offers. 12. Build emergency fund based on net pay, not gross. 13. Plan major purchases using net income, not gross, to avoid being house-poor. 14. Monitor tax withholding quarterly to avoid large refunds or large bills.

Your paystub is more than a formality. It’s proof of your earnings, a tool for tax planning, and protection against payroll errors. Five minutes of review each pay period can save you thousands in corrected errors, optimized tax withholding, and informed financial decisions.