Reading Is Fundamental: Learn How to Read a Pay Stub

Don’t you just love getting paid?

Getting that paycheck after weeks of hard work is satisfying.

You might already have your paycheck deposited directly into your bank account. That’s great! It makes accessing your money easier and your life less stressful.

Still, you should know how to understand what all the numbers and abbreviations on your pay stub mean. Why? Because you never know if there was an error made on your paycheck.

And you don’t want to miss out on your hard earned money!

We’ve made it simple to learn how to read a pay stub. Keep reading and you’ll be an expert in no time!

How to Read a Pay Stub

The first part of understanding your pay stub is being familiar with the deductions from federal and state taxes, then there’s Social Security, Medicare, any medical, dental, visual or other personal insurances, and retirement savings.

You might see a line that refers to your gross pay. This is the total amount you earned for the pay period, prior to the deductions mentioned above.

Whereas, your net pay is a reduced amount that you get to take home or deposit into your bank account.

All of these components add up to your pay stub. Hopefully, your employer is using a reliable payroll company like PayStubCreator to make sure everything is accurate. But just in case, we’ve broken down what you can expect.


There are different reasons for each of the deductions mentioned above. We’ve broken them down so you can learn the differences.

State Taxes

At the state level of government, there are different requirements for taxes. Depending on where you live, you might be required to pay income taxes. This will be automatically factored into your deductions and come out of every paycheck.

Federal Taxes

Based on your dependents such as children or spouses, an amount of federal taxes are withheld from your pay stub each pay period. This is in increments so that all of your annual taxes are not removed at the end of the year.

This money gets sent directly to the government. The amount will be determined based on your w-4 form or an Employee’s Withholding Allowance Certificate.

Retirement Plan

If your employer offers a retirement plan, you may see this as a deduction from your gross pay. This is a great way to save money long term! It might be listed on your pay stub as the type of plans such as 401(k), 403(b), profit sharing, or IRA.

Social Security

Deductions towards Social Security are required by the federal government as part of a larger retirement plan system. Every working American must contribute 6.2% of their gross income to Social Security. In addition, 6.2% is contributed by the employer for each employee.


Contributions to Medicare are also required by the federal government. These are medical benefits that are provided for Americans who are 65 years or older. You must contribute 1.45% of your gross income to Medicare.


There are some abbreviations that could make your pay stub a little confusing. These might be used to save space. Here are a few to watch out for:

  • FT or FTW stands for Federal Tax or Federal Tax Withheld
  • SS for Social Security or SSTW for Social Security Tax Withheld
  • YTD for Year to Date
  • MTW or Med for Medicare Tax Withheld

Not Sure? Ask!

If you find something on your pay stub that doesn’t match what we mentioned here, ask your human resources department for more information. It’s important to check for human error when it comes to your income.

Better to be careful than losing money!

Now that you’ve learned how to read a pay stub, take the next step. Check out my blog to learn more about earning bigger paychecks.

Jeff Campbell

Jeff Campbell is a husband, father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market. Click to learn more about me

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