A $70,000 salary sounds like $5,833 a month. The deposit that actually lands is closer to $4,450, give or take — and the gap is not one deduction but a stack of them, each with its own rules, rates, and annual limits. Most people read only the bottom line of a pay stub. The other lines are where your tax bill, your retirement, and your insurance all quietly happen, and misreading them costs real money at filing time.
Here is the stub, top to bottom.
Gross pay: the starting number
Gross pay is your salary divided by pay periods (26 if biweekly, 24 if semimonthly) plus overtime, bonuses, and commissions for the period. Every deduction below subtracts from this figure — but not all from the same version of it, which is the key to the whole document.
FICA: Social Security and Medicare
Two flat federal payroll taxes come out of nearly every paycheck under the Federal Insurance Contributions Act:
- Social Security: 6.2 percent of wages up to an annual wage base — $176,100 for 2025, rising to $184,500 for 2026. Earn above the base and the 6.2 percent stops for the year, which is why very high earners see their net pay jump late in the year. Verify the current base at ssa.gov, since it adjusts annually with national wage growth.
- Medicare: 1.45 percent of all wages, no cap, plus an Additional Medicare Tax of 0.9 percent withheld on wages above $200,000 in a calendar year.
Your employer pays a matching 6.2 and 1.45 percent on top — money you never see on the stub but which is part of what you cost. These lines fund your future Social Security benefit record and Medicare eligibility; the earnings they report are worth checking annually against your Social Security statement, because errors in the wage record can shrink a benefit decades later.
Federal income tax withholding
Unlike FICA's flat rates, income tax withholding is an estimate — your employer's best guess at your annual tax, sliced per paycheck, driven entirely by the Form W-4 you filed. Filing status, dependents, second jobs, and extra withholding amounts all change the guess. A too-high guess is an interest-free loan to the government refunded in April; a too-low guess is a bill, possibly with penalties. If your refund or balance due last year exceeded a few hundred dollars, the fix is a new W-4, and the IRS Tax Withholding Estimator at irs.gov does the arithmetic for you. The form's mechanics get a full treatment in the W-4 withholding guide.
One persistent misreading worth killing: withholding brackets are marginal. A raise into a higher bracket taxes only the dollars above the threshold at the higher rate — a raise cannot shrink your net pay through income tax. How marginal rates actually apply is covered in tax brackets and marginal rates.
State and local taxes
Most states levy an income tax with their own withholding line; a handful — including Texas, Florida, and Washington — levy none. Some cities and counties add local income taxes, and several states run small payroll-funded programs (disability insurance, paid family leave) that appear as their own line items, often labeled with unhelpful acronyms like SDI or PFML. If a code on your stub means nothing to you, payroll is obligated to explain it — ask.
Pre-tax deductions: the order matters
Here is the part of the stub that rewards attention. Certain deductions come out before taxes are calculated, shrinking the income that withholding and (in most cases) FICA apply to:
- Traditional 401(k) or 403(b) contributions — reduce federal income tax withholding, though not FICA. The employee deferral limit is $23,500 for 2025 and $24,500 for 2026, with catch-up contributions on top at 50 and older; confirm current-year limits at irs.gov. Contribution mechanics live in the 401(k) basics guide.
- Health, dental, and vision premiums under an employer cafeteria plan — typically exempt from both income tax and FICA.
- HSA contributions through payroll — exempt from income tax and FICA, a combination almost nothing else on the stub matches. Limits are $4,400 self-only and $8,750 family for 2026.
- FSA contributions, commuter benefits, and similar plan-year elections.
The practical upshot: a dollar sent to a pre-tax deduction costs you less than a dollar of net pay. Someone in the 22 percent federal bracket contributing $500 a month to a traditional 401(k) sees their deposit drop by roughly $390, not $500 — the difference is tax not withheld.
Post-tax deductions
After taxes are computed, remaining deductions come out at full price: Roth 401(k) contributions (taxed now, tax-free later), supplemental life or disability insurance above certain thresholds, union dues, charitable payroll giving, and — in its own category — wage garnishments, which follow court or agency orders and have federal limits on how much of disposable pay can be taken.
Reading the year-to-date columns
Every line carries a year-to-date figure, and those YTD columns are the audit trail. Three checks worth running each quarter:
- 401(k) YTD versus the annual limit — both to avoid over-contributing across two employers and to pace contributions so you do not hit the cap in October and lose match dollars in November if your plan match is per-paycheck.
- Social Security YTD wages approaching the wage base, if you earn near it.
- Withholding YTD versus your projected tax — a mid-year checkup catches a bad W-4 while there are still paychecks left to fix it.
I audit my own stub twice a year, and the habit has paid for itself exactly twice: once catching a health premium still being deducted for a plan I had switched out of, and once catching a state line that continued three months after I moved. Payroll systems are run by software and humans; both err quietly, and the money rarely walks back on its own.
The stub as a planning document
Seen whole, a pay stub is a map of your marginal decisions. The FICA lines are fixed. The withholding line is tunable via the W-4. The pre-tax lines are elections — each one a place where you can redirect gross dollars at a discount, which is also where a benefits package hides much of its true value, as explored in pricing your benefits in dollars. The Department of Labor's overview of workplace benefit rights at dol.gov covers what employers must disclose about the plans behind those lines.
Your next step: pull your most recent stub and account for every line — name, purpose, and whether it is pre-tax or post-tax. Anything you cannot explain, ask payroll to define in writing. Fifteen minutes with one document, and you will know more about your actual tax situation than most people learn by April.
