How to Read Your Pay Stub: Every Deduction Line Explained (2026)
A standard pay stub contains 4 core sections: (1) Gross Earnings (regular, overtime, bonus); (2) Pre-Tax Deductions (401k, health insurance, HSA); (3) Mandatory Taxes (Fed Tax, OASDI 6.2%, MED 1.45%, State); and (4) Post-Tax Deductions (Roth 401k, union dues), yielding your final Net Take-Home Pay.
Complete Glossary of Common Pay Stub Acronyms & Codes
| Pay Stub Code / Acronym | Full Description | Category | How It Affects Your Tax Burden |
|---|---|---|---|
| FED TAX / FIT / FITW | Federal Income Tax Withholding | Mandatory Tax | Calculated from your Form W-4 elections using 2026 IRS brackets (10%–37%). |
| OASDI / SS / SOC SEC | Social Security (Old-Age, Survivors & Disability) | Mandatory FICA | Flat 6.2% on wages up to $184,500 (max $11,439.00 in 2026). |
| MED / MEDICARE / HI | Medicare (Hospital Insurance) | Mandatory FICA | Flat 1.45% on all wages (uncapped) + 0.9% over $200k. |
| SIT / SWT / STATE TAX | State Income Tax Withholding | Mandatory State | State-mandated withholding (0% in TX/FL up to 9.3%–13.3% in CA). |
| SDI / SUI / PFL | State Disability / Paid Family Leave | State Mandatory | Mandatory employee payroll payroll tax in CA, NY, NJ, WA, MA. |
| 401(k) / TRAD RET | Traditional 401(k) Contribution | Pre-Tax Deduction | Exempt from federal & state income tax; subject to FICA. |
| SEC 125 / MED INS | Health Insurance Premium (Cafeteria Plan) | Pre-Tax Deduction | Exempt from federal tax, state tax, and FICA payroll taxes! |
| HSA / HSA PRE | Health Savings Account Contribution | Pre-Tax Deduction | Exempt from federal tax, state tax (most states), and FICA. |
| ROTH 401(k) | Roth 401(k) Deferral | Post-Tax Deduction | Funded with after-tax dollars; grows 100% tax-free for retirement. |
| GARN / LEVY | Wage Garnishment / Child Support | Post-Tax Deduction | Court-ordered post-tax deduction for debt or child support. |
Pre-Tax vs. Post-Tax Deductions: The Golden Rule
Understanding how deductions interact with your taxes is essential for maximizing take-home cash:
Lowers Taxable Income Today
Deducted from your gross earnings before taxes are computed. If you make $3,000 and put $200 in a Traditional 401(k), the IRS only calculates taxes on $2,800, instantly saving you $44.00+ in federal taxes.
No Immediate Tax Relief
Deducted from your pay after all federal, state, and FICA taxes have been fully subtracted. Examples include Roth 401(k) contributions, union dues, and voluntary life insurance.
How Year-to-Date (YTD) Numbers Reveal Tax Milestones
Every pay stub tracks both current-period and Year-to-Date (YTD) cumulative amounts. Monitoring your YTD column allows you to track two critical annual thresholds:
- Social Security Wage Cap ($184,500 in 2026): Once your YTD Gross reaches $184,500, the 6.2% OASDI deduction disappears, giving you an immediate 6.2% net pay bump!
- 401(k) Elective Limit ($24,000 in 2026): Track your YTD 401(k) contributions to ensure you maximize company matching without over-contributing.
Frequently Asked Questions (FAQ)
Why does Box 1 on my W-2 not match my total gross pay?
Box 1 shows your federal taxable wages, which is your gross pay minus all pre-tax deductions (Traditional 401k, HSA, health insurance). Boxes 3 and 5 (Social Security and Medicare wages) are higher because 401(k) contributions are subject to FICA.
Can an employer deduct money without my permission?
Employers can only make mandatory statutory tax deductions (FIT, FICA, SIT) or court-ordered garnishments without explicit permission. All benefit deductions (health insurance, 401k, FSA) require your signed authorization.
How long should I keep my pay stubs?
Keep your pay stubs until you receive and verify your annual Form W-2 in January. Once your W-2 is confirmed accurate, you can discard individual pay stubs (keeping year-end final stubs for tax records).
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