Reading Your First Paycheck

A pay stub is the record that comes with each paycheck or direct deposit. Think of it as the receipt for your pay.

On it you will find:

• The pay period — the dates this pay covers.
• The pay date — the day the money is paid to you.
• Hours worked and your pay rate — how much you earn per hour.
• Gross pay — everything you earned, before anything comes out.
• Every deduction — each amount taken out, listed one by one.
• Net pay — the money that actually reaches you.
• Year-to-date (YTD) totals — what you have earned and had taken out since January 1 of this year.

Gross pay = hours worked × your pay rate. It is your pay before anything comes out.

Overtime: for most covered hourly workers, hours over 40 in one workweek are paid at at least 1.5 times the regular rate. So if your regular rate is $15.00 an hour, an overtime hour pays at least $22.50. (U.S. Department of Labor, under the Fair Labor Standards Act.)

Net pay (“take-home pay”) = gross pay minus all deductions.

Your take-home pay will almost always be smaller than your gross pay. That gap is normal — it is simply the deductions listed in the next sections, added together.

Federal income tax is withheld — taken out — from every check. How much comes out depends on two things: how much you earn, and your Form W-4.

The W-4 is a form you fill out when you start the job. It tells your employer how much federal income tax to hold back from each check. If your life changes in a big way — for example, you marry or have a child — you can fill out a new W-4.

Social Security tax is 6.2% of your wages.

There is a yearly limit: this tax is taken out only up to $184,500 of wages for 2026. Once your wages for the year pass that amount, this tax stops for the rest of the year. Most people starting a first job will not reach that limit — but it is there on paper, so now you know what it is.

Medicare tax is 1.45% of all your wages. Unlike Social Security, there is no wage limit — it applies to every dollar you earn.

One exception worth one line: an extra 0.9% Medicare tax is withheld on wages over $200,000 in a year.

Most states that have an income tax take their own amount, too. You may see a line for state tax — and in some places a city or local tax as well.

The line and the rate depend on where you live and work, so this part of your stub will look different from a friend's stub in another state.

Some deductions appear only if you signed up for them — for example, health insurance premiums, or money you chose to put into a retirement savings plan such as a 401(k).

• Pre-tax means the money comes out before income tax is figured.
• Post-tax means the money comes out after income tax is figured.

If you see a voluntary deduction you do not remember signing up for, ask about it — see the habits in the last section.

Here is the same made-up stub, with the math shown one step at a time. Every figure is an example.

1. Start with gross pay. 40 hours at $15.00 an hour. 40 × $15.00 = $600.00 gross pay
2. Take out Social Security — 6.2% of gross. $600.00 × 6.2% = $37.20
3. Take out Medicare — 1.45% of gross. $600.00 × 1.45% = $8.70
4. Take out federal income tax. In this made-up example it is $42.00. The real amount depends on the person's pay and Form W-4, so yours will be different. Federal income tax (example) = $42.00
5. What is left is take-home pay. $600.00 − $37.20 − $8.70 − $42.00 = $512.10 net pay

That is the whole idea of a pay stub: start at gross, subtract each line, and you should land exactly on the net pay printed at the bottom.

• Check the basics every time. Does the stub show your name, the hours you actually worked, and the rate you were promised? A quick look catches most mistakes early.
• Keep your stubs. They are proof of income — useful for renting a place, applying for a loan, and at tax time.
• If a number looks wrong, ask. Talk to the payroll person at your job, and bring your own record of the hours you worked. Keeping a simple note of your shifts makes that conversation easy.