The number you were hired at and the number that lands in your bank account are not the same. The pay stub is the map between them. Most people glance at the bottom line and fold it up. Five minutes with it can save you real money.
The top line: gross pay
Gross pay is everything you earned before anything comes out: regular hours, overtime, shift differential, holiday pay, bonuses. Check it first. Count your hours. Make sure overtime is paid at time and a half for hours over 40 in the week, if your job is covered by overtime law. (Some salaried jobs are exempt.) Mistakes happen, and they are easier to fix the same week.
The taxes everyone pays
Two federal payroll taxes come out of almost every paycheck. Together they are called FICA.
- Social Security: 6.2 percent of your pay, up to a yearly earnings cap. Your employer pays another 6.2 percent on top.
- Medicare: 1.45 percent of all your pay, with no cap. Your employer matches it. If you earn more than $200,000 in a year, your employer withholds an extra 0.9 percent on the amount above that. That extra piece is paid by you alone, with no employer match, and the exact amount you owe is settled on your tax return, because the threshold depends on filing status.
On a $2,000 paycheck, that is $124 for Social Security and $29 for Medicare. These are not a penalty. They are what pays for your Social Security check and Medicare coverage later.
Federal income tax withholding
This one is different for everyone. Your employer holds back an estimate of your federal income tax from each check, based on the W-4 form you filled out when you started. If too little comes out, you owe in April. If too much comes out, you get a refund, which means you lent the government money for free all year.
If your life changed (marriage, a baby, a second job, a big jump in overtime), fill out a new W-4. The IRS has a free Tax Withholding Estimator on its website that walks you through it and can produce a filled-in W-4 to hand to your employer.
The tax you don't see
Texas has no state income tax. A Texas employer should not be withholding Texas income tax. If you live or work part of the time in another state, a line for that state's tax can be legitimate. If you're not sure why it's there, ask payroll.
Benefits and deductions
The rest of the deductions are usually things you chose:
- Health, dental and vision insurance. When offered through an employer plan, often taken out before taxes, which lowers your taxable pay.
- 401(k) or retirement plan. Traditional contributions come out before income tax; Roth contributions come out after. If your employer matches, find out how much you need to put in to get the whole match. Leaving a match on the table is leaving pay on the table.
- Union dues, uniforms, garnishments. Know what each one is and why it's there.
The year-to-date column
Most stubs have a YTD column: totals since January. Use it at the end of the year to check that your W-2 matches. Use it in the middle of the year to see whether your retirement savings are on track.
The bottom line
Net pay is what is left. It is the number to build your budget on, not the hiring rate and not the overtime-heavy check from turnaround season.
Keep your stubs, or download them from the payroll site, until you have checked them against your W-2. If something looks wrong, ask payroll in writing. It is your money.
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Sources
- Internal Revenue Service, Topic 751, Social Security and Medicare withholding rates (6.2 percent, 1.45 percent, additional 0.9 percent over $200,000).
- Internal Revenue Service, Topic 560, Additional Medicare Tax.
- Social Security Administration, contribution and benefit base (the yearly earnings cap; $184,500 in 2026).
- Internal Revenue Service, Form W-4 and the Tax Withholding Estimator.
- Internal Revenue Service, Publication 15-B (pre-tax health benefits through cafeteria plans).
- U.S. Department of Labor, overtime pay under the Fair Labor Standards Act.
- Texas Constitution, Article VIII, Section 24-a (no personal income tax).