- Take-home pay is gross pay minus pre-tax deductions, federal income tax, Social Security, Medicare, state and local tax, and after-tax deductions.
- Social Security is 6.2% of wages up to $184,500 for 2026. Medicare is 1.45% of all wages, plus 0.9% withheld on wages over $200,000 in the year.
- Federal income tax withholding depends on the W-4: filing status, the step 2 box, credits, other income and extra withholding.
How to read a pay stub, line by line
Every pay stub has the same bones, even when the labels differ. Top to bottom:
| Line | What it means |
|---|---|
| Pay period and pay date | The days worked, and the day the money is paid. |
| Hours and rate | Regular hours at the hourly rate, and overtime hours. Under the federal Fair Labor Standards Act, covered employees who are not exempt get at least time and one-half for hours over 40 in a workweek. |
| Gross pay | Everything earned before anything comes out. |
| Pre-tax deductions | Health, dental and FSA under a cafeteria plan, and a traditional 401(k). They lower the wages that are taxed. |
| Federal income tax | Withheld from the W-4 answers and the IRS tables. Sometimes labelled FIT or FITW. |
| Social Security | 6.2% of wages, up to the year's wage base. Sometimes labelled OASDI or FICA-SS. |
| Medicare | 1.45% of all wages, plus 0.9% Additional Medicare Tax on wages over $200,000 in the year. Sometimes labelled FICA-MED. |
| State and local tax | Income tax for the state or city, where they have one, and some state programs. |
| After-tax deductions | Roth 401(k), union dues, garnishments. |
| Net pay | What lands in the bank: the take-home pay. |
| Year to date (YTD) | Running totals for the year. They are what end up on the W-2. |
How federal income tax withholding is worked out
The calculator follows the IRS's Worksheet 1A in Publication 15-T for 2026, the method payroll software uses for a Form W-4 from 2020 or later:
- Multiply the taxable wages for the paycheck by the number of paychecks in a year.
- Add any other income from W-4 step 4(a).
- Take off the W-4 step 4(b) deductions plus $12,900 for married filing jointly or $8,600 for everyone else, unless the step 2 box is checked.
- Look up the result in the right annual table and work out the yearly tax.
- Divide by the paychecks in a year, take off the step 3 credits per paycheck, and add any step 4(c) extra.
Example: a single worker paid $2,000 every two weeks, with no other W-4 entries. $2,000 × 26 = $52,000. Less $8,600 is $43,400. The single standard table gives $1,240 plus 12% of the amount over $19,900: $1,240 + $2,820 = $4,060 a year, or $156.15 a paycheck. Social Security is $124.00 and Medicare $29.00, so the take-home is $1,690.85 before any state tax.
Social Security and Medicare
For 2026, the IRS sets Social Security at 6.2% for the employee and 6.2% for the employer, on wages up to $184,500 a person. Medicare is 1.45% each, with no wage limit. On top of that, an employer withholds the 0.9% Additional Medicare Tax on wages over $200,000 in a calendar year, whatever the filing status. There is no employer match for the Additional Medicare Tax.
A traditional 401(k) lowers the wages taxed for income tax but not for Social Security and Medicare. Cafeteria plan health, dental and FSA deductions lower both.
For the owner: what a helper's paycheck costs you
The paycheck is only part of what an employee costs. You also pay your own 6.2% Social Security and 1.45% Medicare on the same wages, federal unemployment tax (6.0% of the first $7,000 of wages, or 0.6% with the full state credit), state unemployment and workers' comp. Our labor rate calculator turns those into the hourly rate you need to bill, and 1099 vs W-2 explains when a helper has to be on payroll.
Changing your withholding
If too much or too little is coming out, a new Form W-4 changes it. The IRS says an employer must start using a replacement W-4 no later than the first payroll period ending on or after the 30th day after receiving it. To claim exemption from withholding in the next year, an employee must give a new W-4 by February 15 of that year.
Last checked October 9, 2026.