Gross, net, FICA, withholding: your pay stub decoded

Your pay stub is the most-received and least-read document in your financial life. It explains, line by line, why the salary you were promised turned into a smaller number in your account — often 25-35% smaller. Every deduction on it is either a tax, a benefit you chose, or savings, and reading it once converts a mysterious gap into a list of specific, adjustable items.

The two headline numbers

• Gross pay — your total earnings for the period before anything comes out: salary, overtime, bonuses.
• Net pay (take-home) — what actually lands in your account after all deductions. The number that pays your rent.
• YTD (year-to-date) — running totals for the year, shown next to each line; useful for tracking taxes paid and benefit contributions.

The tax deductions

• Federal income tax withholding — an estimate of your yearly tax, set by your W-4, sent to the IRS each paycheck. It's a prepayment, trued up when you file.
• State (and sometimes local) income tax — same idea at the state level; some states have none.
• FICA — Social Security (6.2%, up to an annual wage cap) plus Medicare (1.45%), together 7.65%. Your employer matches it; the self-employed pay both halves.
• Withholding is not your final tax — it's a running prepayment. A big refund means you over-withheld and lent the IRS money interest-free.

The benefit and savings deductions

• Pre-tax deductions — 401(k)/403(b) contributions, HSA/FSA, and often health premiums come out before taxes, lowering your taxable income (so a $500 contribution might reduce take-home by only ~$350).
• Post-tax deductions — Roth 401(k) contributions, some insurance, and garnishments come out after taxes.
• Employer contributions — matches and benefit contributions may appear for information; that's free money, not a deduction from you.
• Garnishment — a court- or agency-ordered deduction for debts like child support or unpaid taxes, taken before you see the money.

Reading yours line by line

1. Confirm gross pay matches your expected salary or hours.
2. Check that FICA is about 7.65% of gross — a quick sanity test.
3. Verify your 401(k), HSA, and premium deductions are the amounts you elected.
4. Compare your total withholding to your actual tax bill at filing; adjust the W-4 if you're way over or under.
5. Re-shop the benefit lines at each open enrollment — those are choices, not fixed costs.

The bottom line

Your pay stub turns the abstract gross-versus-net gap into a concrete, adjustable list: taxes you can fine-tune with your W-4, benefits you can re-shop each year, and savings you can raise at every raise. Ten minutes reading it once tells you exactly where a third of your salary goes — and reveals that the space between gross and net isn't just lost to taxes, it's also the only place a dollar can be saved before it's ever taxed at all.