Your first look at a pay stub can be confusing, especially when your take-home pay is noticeably smaller than your salary. Here's what each part means.
Gross pay. Your total earnings before any deductions, for that pay period and year-to-date.
Federal income tax. Withheld based on the W-4 you filled out. Claiming more allowances or extra withholding changes how much comes out.
State and local income tax. Most states withhold income tax; a few (like Texas and Florida) have none. Some cities add local tax.
FICA. This funds Social Security (6.2%) and Medicare (1.45%). You pay these on nearly all wages, and your employer matches them.
Pre-tax deductions. Contributions to a 401(k), HSA, or many health insurance premiums come out before tax, which lowers your taxable income.
Post-tax deductions. Things like Roth 401(k) contributions or certain benefits come out after tax.
Net pay. What actually lands in your bank account after all withholdings, also called take-home pay.
A few tips: check that your name, Social Security number, and withholding look right; if you consistently owe a lot or get a big refund at tax time, adjust your W-4; and if your employer offers a 401(k) match, contributing at least enough to get the full match is effectively free money.
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