What is the difference between gross pay and net pay?

Gross pay is your full salary or wages before any deductions. Net pay is what you take home after federal tax, state tax, FICA (Social Security and Medicare), and any benefit deductions are removed. Most people take home 65–80% of their gross pay.

What does FICA stand for on my pay stub?

FICA stands for Federal Insurance Contributions Act. It covers two taxes: Social Security (6.2% on earnings up to $176,100 in 2026) and Medicare (1.45% on all earnings). These fund retirement and healthcare programs and are mandatory for all W-2 employees.

Why does my paycheck vary if I have the same salary?

Your biweekly paycheck can vary due to changes in your pre-tax deductions (like 401k contributions), hitting the Social Security wage cap ($176,100), extra withholding, or payroll adjustments. Health insurance premium changes mid-year are another common cause.

What does YTD mean on a pay stub?

YTD stands for Year-to-Date. It shows the cumulative totals of your earnings and deductions from January 1 through your most recent pay date. Your W-2 at year-end will reflect your final YTD amounts.

How to Read Your Paycheck: Every Line Explained

Gross Pay vs. Net Pay

Your gross pay is your full earnings before any deductions — the number you agreed to when you took the job. Your net pay (take-home pay) is what actually lands in your bank account after taxes and deductions are subtracted. For most full-time workers, the gap between gross and net is 20–35% depending on income level and state of residence.

Understanding this gap is the foundation of personal finance. If you earn $70,000/year, your gross is $5,833/month — but your take-home might be closer to $4,200 once taxes and any benefits deductions are accounted for.

Federal, State, and FICA Taxes

Federal income tax is calculated based on your annual income, filing status, and W-4 elections. It's withheld from every paycheck using IRS tables. State income tax varies widely — 9 states have none (Texas, Florida, Nevada, and others), while California tops out at 13.3% for high earners. FICA taxes cover Social Security (6.2% on earnings up to $176,100 in 2026) and Medicare (1.45%, plus an additional 0.9% on earnings over $200,000). FICA is non-negotiable regardless of your W-4.

These three categories — federal, state, and FICA — make up the bulk of the difference between gross and net pay for most employees.

Pre-Tax vs. Post-Tax Deductions

Pre-tax deductions reduce your taxable income before taxes are calculated. Common examples: traditional 401(k) contributions, health insurance premiums (employer-sponsored), HSA contributions, FSA contributions, and commuter benefits. These save you money twice — they reduce your taxable income and your total deductions.

Post-tax deductions come out after taxes — Roth 401(k) contributions, life insurance premiums, and wage garnishments are post-tax. They don't reduce your tax liability today, but Roth contributions allow tax-free withdrawals in retirement.

What Does YTD Mean?

YTD (Year-to-Date) columns track your running totals from January 1st to your current pay date. Your YTD gross shows total earnings for the year; YTD federal tax shows total federal taxes withheld. These figures are what your W-2 will show at year-end. Use them to verify your annual tax liability before filing, and to check whether you've hit contribution limits (the 2026 401(k) employee limit is $23,500).

Pay Period Types and Budgeting

You may be paid weekly (52 paychecks/year), biweekly (26 — most common), semi-monthly (24), or monthly (12). Biweekly is the most widespread. A key budgeting trick: biweekly employees get 3 paychecks in 2 months per year. Don't spend those windfalls — use them for an emergency fund or debt paydown.

Quick verification check: Add up all the deductions listed on your pay stub and subtract from gross. The result should exactly match your net pay. If it doesn't, contact your payroll department immediately — payroll errors happen more often than most people realize.

Common Paycheck Mistakes to Watch For

Look for: incorrect filing status (single vs. married affects withholding significantly), wrong 401(k) contribution percentage, duplicate deductions, incorrect FICA calculation (your employer matches 7.65%, so your total contribution is 15.3% combined), and Social Security tax continuing past the $176,100 wage cap. Review your first paycheck at any new job carefully against your offer letter to catch errors early.

This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently. Consult a qualified tax professional for advice specific to your situation.