What each line on your pay stub means

The lines, one by one

Gross pay

Everything earned in the pay period before anything is taken out: hours times the hourly rate, or a yearly salary divided by the number of paychecks in a year.

Federal income tax withholding

Withholding is money an employer sends to the IRS during the year on a worker’s behalf. The amount is an estimate, set by the W-4 (the form that tells an employer how much to withhold) and the IRS withholding tables. The actual tax is settled when a return is filed, which is why some people get a refund and others owe.

State and local income tax

Varies by state, and some cities and counties add their own. Some states have no income tax, so this line may not appear at all.

Social Security

6.2% of wages, up to a yearly wage cap that the Social Security Administration sets. It is one of two payroll taxes, taxes figured on wages and taken out of each paycheck. It pays for Social Security benefits.

Medicare

1.45% of all wages. An additional 0.9% applies to wages above $200,000 in a year. It pays for Medicare, the federal health insurance program.

401(k) or other retirement deferral

A 401(k) is a workplace retirement account, and a deferral is pay set aside into it instead of paid out. A traditional deferral comes out before income tax, so it lowers the wages income tax is figured on. Social Security and Medicare still apply to it. A Roth deferral is taken out after income tax and does not lower those wages.

Pre-tax health insurance premiums

A premium is the regular payment for insurance. Health premiums are usually taken out before income tax and also before Social Security and Medicare, so they lower all three.

Net pay

Also called take-home pay: gross pay minus every deduction. It is the amount deposited or printed on the check.

Year-to-date (YTD) columns

A running total for each line since the start of the year, shown next to the amount for this paycheck.