How to Read Your Paycheck: Gross, Taxes, Deductions and Net (2026)
Each line on a pay stub explained, with the 2026 Social Security wage base, Medicare rates and how federal withholding is estimated.
Updated 2026-10-20
A pay stub has four parts: what you earned, what the government took, what you chose to have taken, and what is left.
Gross pay
Hours × rate, plus overtime at 1.5x, plus any bonus or shift differential. For salaried employees it is the annual salary divided by the number of pay periods.
Federal income tax withholding
Your employer estimates your annual tax from the W-4 and withholds a share each period. For 2026 the IRS percentage method annualises your wages, subtracts the standard deduction ($16,100 single, $32,200 married filing jointly, $24,150 head of household), applies the brackets (10, 12, 22, 24, 32, 35 and 37 percent), subtracts the dependent credit from W-4 Step 3, divides by the number of pay periods, and adds any extra withholding from Step 4(c). Ticking the Step 2 two-jobs box roughly halves the standard deduction and brackets so two incomes are not under-withheld.
Withholding is an estimate. The real tax is settled on your return.
Social Security
6.2% of wages up to the annual wage base, $184,500 for 2026. Once your year-to-date wages pass that, the deduction stops until January. Your employer pays a matching 6.2% that does not appear on your stub.
Medicare
1.45% of all wages, no cap. An additional 0.9% is withheld on wages over $200,000 in the year, regardless of filing status. Employer matches the 1.45% only.
Together, Social Security and Medicare are FICA, 7.65% for most people.
State and local tax
Nine states have no wage income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Others are flat (Pennsylvania 3.07%, Illinois 4.95%) or bracketed (California, New York). Cities such as New York City and Philadelphia add their own.
Pre-tax deductions
401(k) contributions, health insurance premiums (section 125), HSA and FSA contributions come off before income tax is computed. 401(k) contributions still count for Social Security and Medicare; section 125 health premiums do not.
Post-tax deductions
Roth 401(k), union dues, garnishments, charitable giving. These reduce net pay but not taxes.
Net pay
Gross minus everything above. For a single employee earning $1,000 a week in Texas with no deductions: federal withholding about $78, Social Security $62, Medicare $14.50, net about $845.50.
Year-to-date columns
Every line also shows the running total for the year. Check them in December against your W-2.
Figures from IRS Rev. Proc. 2025-32, Publication 15-T and the SSA, verified 2026-10-20. The paycheck calculator on this site uses the same values and labels results as estimates.
A full stub, line by line
Single filer, Illinois, paid bi-weekly, $25 an hour, 84 hours this period (4 overtime), 5% to a traditional 401(k), $90 health premium pre-tax.
| Line | Amount | How it is computed |
|---|---|---|
| Regular pay | $2,000.00 | 80 × $25 |
| Overtime pay | $150.00 | 4 × $37.50 |
| Gross pay | $2,150.00 | |
| 401(k) | $107.50 | 5% of gross, pre-tax for income tax, not for FICA |
| Health premium | $90.00 | Section 125, pre-tax for everything |
| Federal income tax | $209.50 | Percentage method on ($2,150 − $107.50 − $90) annualised |
| Social Security | $127.72 | 6.2% of ($2,150 − $90) |
| Medicare | $29.87 | 1.45% of ($2,150 − $90) |
| Illinois tax | $96.65 | 4.95% of ($2,150 − $107.50 − $90) less the exemption allowance |
| Net pay | $1,488.76 |
Numbers are illustrative of the method; the calculator applies the exact 2026 tables.
Why withholding looks too high or too low
A bonus or a week of overtime is annualised as if every period were that large, so withholding spikes on that check. If you expect a refund every year, your W-4 is over-withholding; lowering the extra amount in Step 4(c) or adding dependents in Step 3 raises take-home pay. If you owe every April, tick Step 2 for multiple jobs or add extra withholding.
Checking your employer’s math
Multiply hours by rate and verify gross. Verify Social Security at 6.2% and Medicare at 1.45% of gross minus Section 125 deductions; those two are mechanical and errors there are real errors. Federal withholding depends on the W-4 you submitted, so pull a copy before disputing it.
Frequently asked
Why is there no state tax line? You work in a state with no wage income tax, or your employer withholds for your state of residence under a reciprocity agreement (for example, living in New Jersey and working in Pennsylvania).
What is “imputed income”? The taxable value of a benefit such as group life insurance over $50,000 or a company car. It is added to taxable wages and then subtracted again, so it raises tax but not take-home pay.
Why did Social Security stop coming out in October? You passed the $184,500 wage base for 2026. It restarts in January.
What is the difference between a W-2 and a pay stub? The W-2 is the annual total your employer reports to the IRS; the stub’s year-to-date column should match it in December.