How to Read a Pay Stub

Here we will learn how to read a pay stub, and take a look at a sample pay stub.

As a financial record of their payment, employees receive a pay stub. Although the pay stub may seem confusing, it doesn’t have to be. This brief summary should help you understand it better.


The pay stub may also be referred to as an earnings statement, wage statement, pay slip, payslip, salary slip, or paycheck stub. They are all terms that refer to the same thing. Pay stubs show details about your salary for each pay period.

Although the information on a pay stub can vary, it usually includes employee and company information, the wages earned for the current pay period as well as the year to date. A section is often dedicated to tax breakdown which shows how much an employee pays for state and federal taxes. A section also shows benefits deductions. The most important thing is that the pay stub shows how much you earn.

If you are employed, you may have received a paycheck with a paystub attached.  Congratulations, you got paid! If you receive a physical paycheck, the pay stub is usually attached to the check. If not, you may be able to access your pay stub information online if direct deposit is used by your company. Lets take a closer look at the information you need to know on your pay stub.


Sample Pay Stub


Pay Stub Information

The first thing to note, is company and employee information. This section includes your company’s information, also your name, employee number, and related information.

Pay period.  Pay period refers to the time you have worked. A biweekly pay schedule, for example, calculates a two-week pay period.

Pay Date.  Pay date is the date you receive a paycheck. Many companies pay their employees on a regular basis, such as every other Friday. This would make Friday the expected pay date.

Gross Income. This section of your pay stub shows your gross income, which is also called wages or earnings, and is a calculation of your hourly rate and your hours worked, if you are an hourly employee.  The total is your gross earnings, which is the amount you would make before taxes and deductions.

Deductions. This section contains the taxes taken from your gross earnings.  The employer sends this money on behalf of the employee to the government. Federal income tax, Medicare and social security are the three main types of federal taxes withheld from your pay. Many states also withhold their taxes.

You may also have other employee deductions. This sample pay stub, does not contain any employee deductions, though you may have some. Employees have the option to withhold contributions for retirement funds, health savings accounts, and other benefits. Pretax deductions, from gross income, have the advantage that they are not included in tax calculations.

Summary section. Here Current Total is Gross Income (or gross earnings). This number is the same gross income as we saw earlier. This is the amount you earned during this pay period, before taxes and deductions.

Current Deductions.  This is the total of your deductions, including taxes and other deductions.

Net Income: This is often called your net earnings, or take-home pay. This is what you should be looking for immediately. It’s the actual earnings that you will receive this pay period after subtracting all taxes, contributions, and so forth. You will also find a year to date summary of these amounts, including year to date gross income, deductions, and net income.

Employees need to be able to read and understand each section of a pay slip to ensure they are getting the correct amount. If there are any concerns regarding an employee’s salary, they can use pay stubs to help resolve them. It is important to know how to read a pay stub. Pay stubs give you a breakdown of gross and net pay as well as all deductions. You can reduce errors by checking it frequently and reporting any mistakes to your employer.


Categories Careers, Earning Money, Personal Finance

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