How to Read a Pay Stub Like an Auditor

The payroll error ran for 14 months before anyone caught it. A project coordinator in Atlanta had been paid at her old hourly rate since a promotion in the fall of 2024; the raise had been approved in writing, but the payroll system still carried the earlier figure. She noticed on a February morning, comparing the rate on her pay stub with the offer letter in her inbox. The difference came to about $2,300, and the employer made it right with a check and an apology.

She was lucky it was that simple. Payroll mistakes are common enough that the people who process paychecks treat them as a routine cost of doing business, and most workers never catch theirs, because most workers never read past the net-pay line. Payroll-industry surveys have long suggested that a majority of employees glance at the bottom number and nothing else.

This article does the reading for you, line by line: gross pay; pre-tax deductions for health insurance, retirement and flexible spending accounts; the FICA taxes for Social Security and Medicare; federal and state withholding; and the year-to-date columns that tie the document together. It also shows how to verify every number in about 10 minutes, which errors show up most often, and how the withholding decisions you make now decide whether you get a refund in the spring or a bill with your return.

The lines on every stub

Pay statements look different from company to company — ADP, UKG and Paychex generate most of them, each with its own layout — but the content is standardized by federal law, and the same lines appear in the same order on nearly all of them. Once you can read one, you can read any of them.

Where you find the document has changed faster than its contents. The paper stub of the 1990s is now a PDF in a self-service portal, an entry in a mobile app, or a screen that disappears when you close the tab. That makes it easier to ignore and harder to archive, which is why the first rule of the audit is a simple one: download a copy every pay period and keep a folder. A worker who can produce 26 stubs at year's end can reconstruct any dispute in an afternoon; a worker with nothing but a portal password has to trust the company's word.

Here is a sample biweekly stub for a salaried worker earning $90,000. The lines are the ones every stub shares, and the sections below walk through each of them.

Sample biweekly stub, $90,000 salary, single health coverage

Line	Amount	What it is
Gross pay	$3,461.54	$90,000 ÷ 26 pay periods
Health insurance	−$138.00	Employee share, single plan
401(k) deferral, 6%	−$207.69	Pre-tax retirement contribution
Social Security and Medicare	−$264.81	6.2% + 1.45% of gross
Federal and state withholding	−$557.00	From W-4 and state tables
Net pay	$2,294.04	Deposited to your account

Gross pay: the number everything hangs from

The top of the stub shows gross pay for the pay period — the full amount earned before anything is taken out. If you are salaried, it is your annual salary divided by the number of pay periods: 26 for biweekly schedules, 24 for semimonthly, 52 for weekly. If you are hourly, it is your rate multiplied by your hours, plus overtime at time and a half for anything beyond 40 hours in a week under federal law. Nonexempt stubs usually show the hours in one column and the rate in the next, so the arithmetic is checkable in seconds. A $22.50 hourly rate for 40 hours should produce $900 in gross pay; add six hours of overtime at $33.75, and the line should read $1,102.50. If it reads anything else, the error is at the top, and every number below it is wrong too.

The gross line is also where raises and bonuses go to get lost. A raise approved in a performance review sometimes takes two or three pay periods to reach the system, and a promotion can leave the old rate in place for months, as it did in Atlanta. Bonuses and commissions are usually paid on separate lines, sometimes on separate checks, and a missing one is easy to miss in a busy month. The Labor Department's overtime rules — and the tools for checking them — are a separate subject, but the stub tells you quickly whether the gross number matches what you think you earned.

The pre-tax layer

Below gross pay come the deductions that happen before any tax is calculated. The most common are health insurance premiums, retirement contributions, and money set aside in flexible spending accounts. These are not taxes; they are payments you authorized, taken out before withholding is computed, which is why they are called pre-tax.

Health insurance is the largest of them for most families. The average worker with employer-sponsored coverage contributes about $120 a month toward a single plan and more than $400 a month toward family coverage, according to the Kaiser Family Foundation's annual survey of employer benefits; the employer pays the rest. The number on your stub will not match those averages — plans vary by region and company — but it should be identical every pay period and should match the amount on your open-enrollment paperwork. A change in that line without a change in plan is the kind of thing payroll departments fix only when someone asks.

The retirement line is the one you control, and the stub shows your choice on every check: the percentage you set, the dollars that came out, and, if your employer matches, the company's contribution on its own line. Vanguard's annual study of the plans it administers puts the typical employee deferral at 6 to 7 percent of pay. The check is simple — a worker earning $1,800 a week who defers 6 percent should see $108 leave the stub, and a 50 percent match should add $54 from the employer. Missing match, wrong percentage, or a contribution that never changed when you asked for one: all of them show up here first.

Flexible spending accounts and health savings accounts sit on the same layer. The IRS caps FSAs at $3,200 for 2025 and $3,300 for 2026; the HSA limits for 2026 are $4,300 for individual coverage and $8,550 for a family. The mechanic is the same for both — the money comes out before taxes, lowering your taxable income and your FICA taxes — but the rules differ sharply: most FSAs are use-it-or-lose-it, while HSAs roll over and belong to you.

FICA: the tax you cannot avoid

Next come the two lines that confuse more readers than any others, because they look like withholding but are not. Social Security tax is 6.2 percent of gross pay, and Medicare tax is 1.45 percent. Together they are FICA, the payroll taxes that fund the two federal programs. Unlike income tax, they are flat and unavoidable: no W-4 form changes them, and they come out of every paycheck until the caps kick in.

The caps matter, and they are one of the best places to catch an error. Social Security applies only to the first chunk of annual earnings — the wage base, which the Social Security Administration resets each fall and which stands at roughly $180,000 for 2026. A worker earning $150,000 will see $9,300 in Social Security tax this year, and no more once the year-to-date total crosses the base; a worker earning $250,000 stops at the same point, not at a higher number. When the deduction keeps running past the base, the stub is wrong. Medicare has no cap, and high earners owe an extra 0.9 percent — the Additional Medicare Tax, as the IRS calls it — on wages above $200,000 for single filers and $250,000 for married couples filing jointly.

Self-employed readers will recognize these rates doubled: the self-employment tax is 12.4 percent for Social Security and 2.9 percent for Medicare, because a self-employed person pays both the worker's share and the employer's share. On an ordinary stub, the employer's half never appears, which is why salaried workers sometimes assume FICA is smaller than it is.

Withholding: the tax you control

The federal income tax withholding line is the one number on the stub that is a guess — an educated one, but a guess. It is calculated from the W-4 form you filled out at hiring, using the withholding tables the IRS publishes each year. The current form has four steps: personal information, multiple jobs, dependents, and extra withholding. Each step shifts the amount that comes out of the check, and the IRS's Tax Withholding Estimator at irs.gov can tell you whether the guess is close before April arrives.

State withholding sits beside it, and it varies far more. Nine states — Texas, Florida, Nevada among them — collect no state income tax at all, and their stubs end at the federal line. The rest use either a percentage of federal withholding or tables of their own, and a few, like California, add small lines for disability insurance. None of it is a tax bill. It is a payment schedule.

The connection between withholding and refunds is the most misunderstood part of the document. A refund is not a bonus; it is the return of money you overpaid during the year, which means the withholding line was set too high. The average refund has hovered around $3,000 in recent years, IRS statistics show. Economists tend to describe a big refund as an interest-free loan to the Treasury. The opposite error is worse: withholding set too low produces a bill in April, and if the shortfall is large enough, the IRS adds an underpayment penalty on top of the tax.

The year-to-date columns

The right edge of the stub is where the audit actually happens. Every line on the left has a year-to-date twin, and the two columns together tell you whether the year is running correctly. The check is arithmetic: on a biweekly schedule, 13 pay periods into the year means YTD gross should sit near half of your annual salary. A worker making $110,000 who sees $54,000 in YTD gross after 13 checks is on track; the same worker seeing $48,000 has a question worth asking.

The caps make the YTD columns the best error detector on the page. Social Security withholding should stop at the wage base, and 401(k) contributions should stop at the annual limit — $23,500 in 2025, slightly higher for 2026 — at which point the deduction line goes quiet or switches to after-tax. A stub that keeps deducting past a cap is a $50-to-$100-per-pay-period error that compounds until someone looks.

The YTD figures are also the bridge to the W-2. At the end of January, the W-2 should summarize what the stubs showed all year: Box 1 wages, Box 2 federal tax withheld, and the coded entries in Box 12 for retirement and other items. Workers who compare the last stub of December with the W-2 catch the annual errors — a contribution coded wrong, a bonus taxed in the wrong year — that no one else will notice.

The 10-minute audit

You can verify a stub in the time it takes to finish a cup of coffee. Once a month, run five checks:

1. Gross pay: multiply your rate by your hours and add overtime at time and a half; salaried workers divide annual salary by the number of pay periods.
2. Retirement: confirm the percentage matches what you set, and that the employer match line is present if you have one.
3. FICA: confirm 6.2 percent for Social Security and 1.45 percent for Medicare, and check that Social Security has stopped if YTD wages have passed the base.
4. Withholding: compare this check's federal and state lines with the last one; a change without a W-4 change is a flag.
5. Year-to-date: run the caps and the salary math against your memory of the year.

If a number does not match, do not assume the system caught it. Payroll departments are small — often one or two people at a mid-size company — and they process thousands of lines a week. Write to payroll with the stub attached and the discrepancy spelled out, ideally within the pay period: most systems can adjust the next check, but reaching back further usually requires a special request, and some employers are quicker to fix a current error than a historical one.

The errors that actually happen

How common are the errors? PayrollOrg, the professional association for payroll, has cited industry estimates that 1 percent to 8 percent of paychecks contain at least one mistake, depending on the system and the study. The Labor Department's Wage and Hour Division, which enforces federal pay law, collected roughly $300 million in back wages in a recent fiscal year, much of it from workers paid the wrong rate or missed overtime. A payroll compliance consultant in Chicago who has reviewed thousands of pay statements puts it plainly:

"The stub is the only record of the employment deal that you see every two weeks. Ninety percent of the errors I find were sitting on a stub for months, visible to anyone who did the arithmetic."

The errors themselves follow a pattern. Wrong pay rates, as in Atlanta. Overtime paid at straight time, or not at all. Benefit deductions that changed without a plan change. And the quietest one: a deduction that keeps running after it should have stopped. A communications manager in Minneapolis discovered that a flexible spending account from a previous employer had been deducting $96 a month for 11 months after she left the plan — money she could not spend, because the old account had closed. The refund took two pay periods and a manager's approval.

When you find an error, the law is mostly on your side. More than half of states require employers to provide itemized pay statements, and the federal Fair Labor Standards Act lets the Labor Department recover unpaid wages on a worker's behalf. The practical reality is blunter: the worker who asks first gets paid first, and the worker who never asks may never be paid, because many states limit how far back wage claims can reach. The clock starts at the error, not at the discovery.

What the stub does not tell you

A stub is a record of the past, and it has limits. It does not say whether your pay is fair for your market, whether your classification as exempt or nonexempt is legal, or whether your total compensation — benefits, retirement match, paid time off — is competitive. Those are separate questions that need market data, and they are worth a separate hour. But the stub is the foundation: every comparison, every negotiation, and every raise conversation starts with the question of whether the numbers you were promised are the numbers you were paid.

The habit itself is the payoff. Ten minutes a month is enough to catch the class of errors that cost workers the most, and the discipline matters most at the moments a stub is trying to hide something: a rate change, a missed cap, a deduction with no explanation. The 2026 payroll calendar brings a few things worth watching — a new Social Security wage base, higher retirement limits, state pay-statement rules that keep getting stricter — and the first stub of the year is the place to see them. Run the audit, then compare the December stub to the W-2 in January. Use the calculators here to sanity-check the math — salary to hourly for the rate, overtime pay for the hours, salary calculators for the year. People who read their stubs get paid correctly; that is a small, quiet edge, and it compounds like a 401(k) match.