What Is a Pay Stub? Guide to Earnings, Taxes and Deductions
A pay stub explains how gross pay becomes net pay for one pay period. What each section reports, why deductions differ between employees and how a stub differs from a paycheck.
A pay stub is a payroll statement that explains an employee's earnings for a specific pay period and shows how gross pay becomes net pay. It commonly includes pay dates, earnings, taxes, deductions and year-to-date totals.
The document gives employees more context than a bank deposit alone. Instead of seeing only the amount received, an employee can review the earnings and deductions behind that payment.
What Information Is on a Pay Stub?
Most pay stubs contain employer and employee information, the pay period, pay date, earnings, payroll taxes, other deductions, net pay and cumulative year-to-date figures.
The exact layout and legally required fields can vary by state, but these categories form the core of most payroll statements.
Understanding Earnings
The earnings section shows how compensation was calculated. Hourly employees may see regular hours, rate of pay, overtime hours and overtime earnings. Salaried employees may see a salary-based amount for the pay period.
Bonuses, commissions and other compensation can also appear when they are part of the actual payroll.
What Is Gross Pay?
Gross pay is compensation before applicable taxes and deductions are removed. It is the starting point for understanding the rest of the pay stub.
If several types of earnings apply, their combined amount generally contributes to the gross pay for the period.
Taxes on a Pay Stub
Common federal payroll entries include federal income tax withholding, Social Security tax and Medicare tax. State and local taxes may also appear depending on the employee's location and circumstances.
These taxes do not all use the same calculation. Federal income tax withholding, for example, depends on current withholding rules and the employee's Form W-4 information.
Other Payroll Deductions
Pay stubs can include deductions beyond taxes. Examples may include health insurance, retirement plan contributions and other authorized benefit or payroll deductions.
Not every employee has the same deductions. The statement should show only amounts that actually apply to the employee.
What Is Net Pay?
Net pay is the amount left after applicable taxes and deductions are taken from gross pay. It is commonly the amount the employee receives through direct deposit, check or another lawful wage-payment method.
A large difference between gross and net pay is not automatically an error. Review the individual deductions to understand where the difference came from.
What Does YTD Mean on a Pay Stub?
YTD means year-to-date. A YTD figure shows the cumulative amount from the beginning of the year through the current payroll.
Current pay tells you what happened during one pay period. YTD pay, taxes and deductions show how those amounts have accumulated over time.
Why Pay Stubs Matter
Pay stubs help employees review compensation and identify payroll questions. They also help employers maintain organized wage records and explain how individual payments were calculated.
Keeping historical pay stubs can make it easier to compare pay periods, review year-to-date totals and understand changes in taxes or deductions.
Pay Stub vs. Paycheck
A paycheck is the payment itself. A pay stub is the statement that explains the payment. With direct deposit, an employee may never receive a physical paycheck but can still receive an electronic pay stub.
This distinction is useful because the pay stub contains payroll detail that the payment transaction alone does not show.
Read My Full Online PayStub Guide
I cover this topic in greater detail for Online PayStub here: What Is a Pay Stub?
