What Is a Paystub? Complete Breakdown Guide

What Is a Paystub?

A paystub (also called a pay slip, paycheck stub, or earnings statement) is a document that comes with your paycheck — either printed or digital — detailing exactly how your gross pay was calculated and where the money went before it reached your bank account.

In the United States, federal law (the Fair Labor Standards Act) requires employers to provide paystubs, though the specific requirements vary by state. In Canada, each province has its own employment standards legislation requiring written wage statements.

Understanding your paystub is not just about curiosity — it is about catching errors, verifying proper tax withholding, ensuring correct benefit contributions, and spotting identity theft or payroll fraud early.

The Top Section: Employee & Employer Information

Every paystub starts with identifying information:

• Employee name and address
• Employer name and address
• Pay period dates (e.g., June 1–15, 2026)
• Pay date (when the money arrives)
• Check number or direct deposit reference
• Pay type (salary, hourly, commission, etc.)

Earnings Section: Gross Pay

The earnings section shows how your total gross pay was calculated for this pay period:

• Regular pay: Your base salary or hourly rate × hours worked.
• Overtime pay: Hours over 40 per week (in most US states) at 1.5× your regular rate.
• Bonuses & commissions: One-time or recurring incentive payments.
• Paid time off (PTO): Vacation, sick leave, or holiday pay.
• Reimbursements: Business expense reimbursements (often listed separately as non-taxable).

The total of all earnings lines is your gross pay for the period.

Pre-Tax Deductions

Before taxes are calculated, certain deductions may be subtracted from your gross pay. These are “pre-tax” because they reduce your taxable income:

• 401(k) / 403(b) / TSP: Traditional retirement contributions. 2026 limit: $23,500 ($31,000 age 50+).
• HSA: Health Savings Account. Reduces both income tax and FICA.
• FSA: Flexible Spending Account for health care or dependent care.
• Transit/parking deductions: Pre-tax commuter benefits.
• RRSP (Canada): Registered Retirement Savings Plan contributions.

Taxes Section

This is typically the largest deduction section. It includes:

Federal Income Tax

Withheld based on your W-4 selections (or TD1 in Canada) and the IRS withholding tables. This is an estimate of your annual income tax liability prorated per paycheck. If too much or too little is withheld, you will see the difference when you file your tax return.

Social Security (USA)

6.2% of gross wages up to the annual wage base ($176,100 in 2026). Once you reach the cap, Social Security deductions stop for the year.

Medicare (USA)

1.45% of all gross wages — no cap. If you earn over $200,000 (single) or $250,000 (married filing jointly), an additional 0.9% surcharge appears here.

State Income Tax

Varies by state. Some states (TX, FL, NV, etc.) have no income tax. Others withhold at a flat rate or use progressive brackets.

State-Specific Levies

CA SDI (1.1%), WA Cares (0.58%), NJ FLI (0.45%), NY PFL (0.373%), OR Family Leave (up to 1%), MA PFML (~0.44% employee share), RI TDI (1.3%). These vary by state and may appear on their own line.

Canada: CPP and EI

CPP: 5.95% on pensionable earnings up to $71,300 (2026). EI: 1.64% on insurable earnings up to $65,700. Quebec residents pay QPP and QPIP instead, at higher rates.

Post-Tax Deductions

After taxes are calculated, additional deductions may be taken from your remaining pay:

• Roth 401(k) / Roth IRA: After-tax contributions to retirement accounts.
• Health insurance premiums: Your share of employer-sponsored medical, dental, and vision coverage.
• Life insurance: Group term life coverage premiums.
• Garnishments: Court-ordered deductions (child support, wage garnishments, student loan seizures).
• Union dues: Labor union membership fees.
• Charitable contributions: Employer-facilitated donation programs.

Net Pay (Take-Home Pay)

At the bottom of the deductions section, you will find your net pay— the amount deposited to your bank account or printed on your check. This is your “take-home pay.”

Net Pay = Gross Pay − Pre-Tax Deductions − Taxes − Post-Tax Deductions

If the net pay seems lower than expected, review each deduction line carefully. Common issues include wrong W-4 allowances, double deductions, or incorrect benefit premium amounts.

Year-to-Date (YTD) Totals

Every paystub also shows year-to-date totals for each line item. YTD totals are critical for:

• Spotting when you have hit the Social Security wage cap (your YTD SS tax should stop changing once capped).
• Monitoring if your 401(k) contributions are on track for the annual limit.
• Verifying that your total earnings match your Form W-2 or T4 at year-end.

Common Paystub Errors to Watch For

• Wrong pay rate: Your hourly rate or salary changed but the system was not updated.
• Missing overtime: You worked overtime hours but were paid at straight time.
• Incorrect tax withholding: Wrong filing status or withholding allowances on your W-4/TD1.
• Double deductions: A deduction appears twice on the same stub.
• Missing YTD carryover: YTD totals were reset mid-year by accident.

Create Your Own Paystub Draft

Need to generate a professional paystub draft for proof of income? Our Professional Paystub Builder creates compliant, PDF-exportable paystubs with IRS and CRA standard deduction calculations built in. All processing happens in your browser — no data is sent to any server.