Suppose you are looking for paid employment or already work with an employer. In that case, chances are you would at some point receive a pay stub or what most people also refer to as a paycheck statement or payslip. What exactly is a paystub anyway? A pay stub is a document that contains information on your wages for every pay period, including any deductions, taxes, and benefits you might have.
If you would like to understand your paycheck and take-home money better, you would find more information about this in your pay stub. While not all employers would issue a pay stub, they are required by the Fair Standards Labour Act (FSLA) to keep track of records showing employees’ hours and how much they were compensated for at least three years.
Paycheck statement details differ for W-2 and 1099 employees. Many people find the data in a payslip too detailed and complicated. If you would like to know more about the information contained in your pay stub, this simple guide will help you understand how to read this important document.
What Are the Ways You Can Receive Your Pay Stub?
You can receive pay stubs in one of two ways. They can be in a physical form, attached to your paycheck, or your employer can send them to you digitally. Employers use the latter if your wages are directly deposited into your bank account.
Most times, you can access this electronic payslip when you sign into an employee payroll portal.
What Are the Reasons You May Need a Copy of Your Pay Stub?
You may need a copy of your pay stub to confirm employment status with your employer or for some form of documentation for specific applications. Here are a few reasons you would need to obtain your paystub from your employer:
To verify your payment information: Sometimes, you need to review your pay stub to verify the payment information, check for accuracy, or spot any mistakes. You would also want to confirm deductions towards your pension contributions, health savings account, and other flexible spending amounts. You can also verify your year to date gross and net pay through your pay stub.
To apply for a loan: Some car loan or house loan applications require copies of your paystub to show that you are currently employed. Loan providers like to know that the income you make is sufficient to cover your loan repayment amount.
Other types of credit applications sometimes require employee paystubs before being approved. You can also use your pay stub to fill out your W-2 form when it’s time to file your taxes.
What’s the Information Included in Your Paystub?
To read and understand your pay stub, the essential details and information to look out for are:
Gross pay:
This is the pre-tax wage or salary earned by either hourly or salaried workers before any deductions. Your gross earnings are usually the annual amount offered to you by your employer, divided into smaller periods, be it weekly, bi-weekly, or monthly. As an hourly employee, this would be your earnings for hours worked.
Your gross pay is the pre-tax amount earned before any deductions or taxes, social security, or other contributions. Your pay stub should show the current gross income for the period and the earnings year to date. Note that this is not the amount you will receive on your paycheck.
Pay rate:
Your pay rate amount would be shown on your pay stub. For salaried employees, the pay rate would be the total amount earned for the pay period. If you are an hourly employee, you would see your hourly rate, which you were offered in your employment letter. If you have earned any overtime or double shift hourly rate, this should also reflect your paystub.
Pay period:
This indicates the period for which the employee has worked and is entitled to wages or salary. Paystubs usually show pay details for a particular pay date period. Your pay period would show a start pay date and end pay date for which your pay is calculated. Sometimes, the date you were actually paid by a paycheck or direct transfer into your bank account would be included in the pay stub.
Hours worked:
Pay stubs show hours worked for hourly workers. Hours worked would also include any overtime, weekend, or double shift hours. The hours worked are sometimes also shown for salaried workers.
Employer details:
Your employer’s name and contacts, such as HR or payroll number, can be located on your pay stub. Sometimes, the employer’s address would also be on your paystub.
Personal details:
Your pay stub would contain details such as your name, social security number, address, and phone number.
Benefits and other contributions:
The benefits contributed by your employers, such as any insurance contributions or 401 k contributions towards your retirement plans, are shown in your paycheck statement. It could also include other employee benefits such as health insurance, flexible spending, or balances to any health care savings account.
Sometimes, employees also contribute to their pre-tax dollars into their health insurance, other health savings plans, pension, and other retirement plans. This would be shown on the pay stub.
Federal Tax deductions:
The significant deductions in a paystub are the taxes withheld on behalf of W-2 employees by their employers. The federal tax amount on your paycheck shows the tax withheld to the federal government. The IRS manages and monitors federal income taxes.
The amount paid for federal tax withholding depends on how much you earn and your income tax bracket. Information on any Federal Unemployment Tax Act (FUTA) contribution towards unemployment insurance for employees can also be added to your paycheck statement.
State Tax deductions:
You would also see information on any applicable state or local taxes withheld from the government. Your state tax withholding depends on the state where you work. Some states have the rights reserved to their own tax system, which may be bracketed, while some states do not require income tax withholdings.
Details on any State Unemployment Tax Act (SUTA) contribution for employees can also be added to your paycheck statement.
Other deductions:
Other deductions include FICA taxes, social security, and medicare. As an employee or hourly worker, you are expected to contribute to social security and medicare every year. Employers also contribute towards these, and the portion contributed would be shown in your payslip.
Net pay:
After all taxes and deductions from your income, you will be left with your net pay. Your net revenue is what you take home. This is how much money an employee receives when a paycheck is cashed, or the total amount of funds automatically deposited into the employee’s account.
What Are the Different Sections of a Pay Stub?

When you read a paystub, you will notice that the information is divided into different sections. One of the sections will show your gross earnings and other related payroll earnings. Another section captures employee and human resources or employer details.
Your pay stub’s central section shows the total deductions for the current period and the deductions year to date. Other areas show the employer contributed benefits and taxes. A summary section shows total taxable income, less all deductions, and the net pay, what you as an employee takes home.
Earnings Included in Your Pay Stub
The earnings shown in your pay stub may include:
- Regular pre-tax pay
- Bonuses
- Vacation pay
- Sick pay
- Holiday pay
- Payroll advances
- Commissions and other payroll benefits
The total income included in pay stubs may vary by employer or even states.
Deductions Included in a Pay Stub
Paystubs are essential because they show you details on what is deducted from your pre-tax income. Deductions in your paystub determine your take-home money, also known as your net income.
Some significant deductions include:
- Federal and State taxes
- Social Security
- Local taxes
- Medicare
- Voluntary Loan Payments
- Insurance Premiums
- Retirement or pension plan contributions
- Other deductions
How Do You Read a Pay Stub?
When you receive your pay stub, be sure to check for important details and ensure the information included is accurate, especially if this is your first time receiving your pay stub from a particular employer. In that case, you should check your personal information such as your name, address, and contact information to ensure they are correct.
Next, you want to review your gross pay and confirm your earnings. Every gross earning should be reviewed to ensure correctness.
After your gross pay, you would also want to review the taxes withheld to the government. The taxes include Federal income tax withholding, state income tax withholding, local taxes, social security, medicare, and any other required taxes.
You also need to review all deductions and contributions, which may include employer-paid benefits. These can range from contributions to your pension, 401-k and other retirement plans, life insurance, disability insurance, dental plans, or other similar services. Applicable voluntary or involuntary deductions as an employee will affect your take-home pay.
Finally, review your paycheck or any money received and search for discrepancies with your net income and take-home pay in your paycheck slip. If you identify any, you can contact your employer to know the reasons for this and ensure that they make any necessary changes.