Your pay stub is the receipt for your work. It shows what you earned, what was taken off, and what actually reached your bank account — and the gap between the first number and the last is often larger than people expect. That gap is not a single tax. It is several different deductions, each following its own rules, and once you know what each line means, you can check whether your pay is right. This guide walks through a typical US pay stub line by line, then adds short notes for the UK, Australia and Canada. It is educational only, not personal tax advice. No tax rate or threshold is stated here from memory: every figure below was checked against an official or authoritative source on 13 November 2026.
Start with the three big numbers
Every pay stub has the same skeleton: gross pay at the top, deductions in the middle, and net pay at the bottom. Gross pay is everything you earned in the pay period before anything was taken off — salary or hourly wages, plus overtime, bonuses, commission or paid leave. Net pay is what is left after every tax and deduction, and should match the deposit in your bank account. Between them sit the pay period, the dates the pay covers, and the year-to-date (YTD) column, which adds up each figure since 1 January. Each new stub’s YTD figure should equal the previous stub’s YTD figure plus the current period’s figure. At year end, your final stub should reconcile with your W-2.
Earnings: how gross pay is built
The earnings section lists each type of pay separately. For an hourly worker, that means the hourly rate, the number of regular hours, and any overtime hours. For a salaried worker, it is usually the annual salary divided by the number of pay periods — 26 for biweekly, 24 for semi-monthly, 12 for monthly. Bonuses and commission appear as their own lines. Check the hours and the rate first: a wrong rate or a missing overtime hour is the most common pay error. A taxable benefit, such as a company car, may increase your reported wages without adding cash. A qualified reimbursement may add cash without becoming taxable wages.
Federal income tax withholding: an estimate, not your tax bill
The first deduction on most US stubs is federal income tax. This line is the least precise figure on the page. Your employer does not know your tax bill. It knows one job’s wages and whatever you wrote on your Form W-4 — the form you complete when you start a job, giving your filing status and any adjustments. Using that, plus the withholding tables in IRS Publication 15-T, it projects your pay for the year, works out the tax on that projection, and withholds one pay period’s share. It is a forecast of a year you have not finished living. If you have a second job, a working spouse, freelance income, or a burst of overtime, the forecast can be wrong, and the difference is settled when you file your tax return. That is why the federal withholding line is not a flat rate. If yours looks consistently too high or too low, you can submit a new W-4 to your employer at any time. This guide states no federal tax rate or bracket here, because the amount depends on your W-4, your pay frequency and your total income for the year.
Social Security and Medicare: fixed percentages
The next two lines are fixed percentages, with no guessing involved. Together they are often labelled FICA. The employee rate is 6.2% for Social Security and 1.45% for Medicare, a combined 7.65%. Your employer pays the same amounts again on its own side. The difference between the two lines is the cap. Social Security applies only up to an annual wage ceiling, set at $184,500 for 2026. Above that, the Social Security line stops for the rest of the year. The most anyone pays into Social Security in 2026 is 6.2% of $184,500, which is $11,439. Medicare has no ceiling, and an extra 0.9% is withheld on wages above $200,000 in a year with one employer.
Pre-tax and post-tax deductions: the order matters
Not all deductions are treated the same, and the order in which they are taken changes the tax. Pre-tax deductions come off before tax is worked out. A traditional 401(k) deferral reduces the wages subject to federal income tax, but not the wages subject to Social Security and Medicare — you pay FICA on that money now, and income tax later when you withdraw it. A health insurance premium paid through a cafeteria plan is generally excluded from federal income tax and from Social Security and Medicare as well. That is why a stub can show three different taxable-wage figures — federal, Social Security and Medicare wages — and they can all differ from gross pay without anything being wrong. Post-tax deductions come off after tax, so they do not reduce your taxable wages. A Roth 401(k) contribution is the best-known example; others include wage garnishments, union dues and overpayment repayments. Each deduction should be named, with its amount and where the money went. See our guides: What Is a 401(k)? and US Jobs Report Explained.
State tax and other lines
If you live in a state with an income tax, a state income tax line follows the federal lines, worked out from your state’s own tables and withholding form. Some states have no state income tax on wages. Some stubs also show a local income tax or state disability insurance. Other lines to look for include health, dental and vision premiums, life insurance, a flexible spending account (FSA) or health savings account (HSA) contribution, and charitable giving taken through payroll. None of these should appear without your agreement, except where the law requires it.
A quick check you can do
Take a worker paid biweekly, earning $2,000 gross, with a $120 health premium paid pre-tax and a $100 traditional 401(k) deferral. Federal taxable wages would be $2,000 less both deductions, or $1,780, while Social Security and Medicare wages would be $2,000 less only the health premium, or $1,880. Social Security at 6.2% of $1,880 is $116.56, and Medicare at 1.45% is $27.26. Federal withholding is then worked out from the $1,780 figure, the W-4 and the IRS tables — it is not a flat percentage. The point is the method: check the earnings, the three taxable-wage bases, and the YTD column. If something looks wrong, start with payroll. Most errors are administrative: a wrong rate, a missed hour, or a benefit election that was not processed.
UK, Australia and Canada: the same idea, different names
In the United Kingdom, the document is called a payslip, and by law it must show gross pay, every deduction and net pay, and be given on or before payday. Income tax is collected through Pay As You Earn (PAYE), based on your tax code — most commonly 1257L, which reflects the standard personal allowance of £12,570. National Insurance is separate: in 2026/27, employees pay 8% on earnings between £12,570 and £50,270 a year, and 2% above that. Check your tax code first if your pay looks wrong.
In Australia, the payslip must be given within one working day of payday, and must show the employer’s name and ABN, the pay period, gross and net pay, each deduction, and superannuation details. Tax is withheld under Pay As You Go (PAYG) withholding. Superannuation — the employer’s retirement contribution — is 12% of ordinary time earnings, and from 1 July 2026 it must reach your fund within seven business days of payday under the “payday super” rules. The tax-free threshold is $18,200.
In Canada, the document is a statement of earnings, given each pay period. The main deductions are federal and provincial income tax, Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums. For 2026, the CPP employee rate is 5.95% of earnings between the $3,500 basic exemption and $74,600 of maximum pensionable earnings, matched by the employer. The EI rate outside Quebec is 1.63% of insurable earnings, up to $68,900, with a maximum employee premium of $1,123.07.
The bottom line
A pay stub is a small ledger: gross pay at the top, net pay at the bottom, and in between a handful of lines that each follow different rules. Learn the three big numbers first, then the fixed-percentage lines — Social Security at 6.2% up to the $184,500 wage base in 2026, Medicare at 1.45% with no cap — and remember that federal withholding is an estimate based on your W-4, not your final tax bill. Check the YTD column every pay period and query anything unexplained with payroll. For the wider context of pay and prices, see our explainer on inflation and the CPI in 2026.
Educational only, not personal tax advice. Tax rules vary by country, state and personal circumstances, and they change. Check current guidance from the IRS, HMRC, the ATO or the CRA, or speak to a qualified tax professional.