A pay stub shows what you earned, what was taken out, and what you actually take home. Reading one helps you catch mistakes, plan your spending, and see where tax money comes from. The rules here are U.S. federal rules; state rules vary.
👪When to teach it: Watch from about 10, help from about 13, do it alone from about 15.
Gross pay minus every deduction equals net pay. Budget with net pay.
You'll need
A recent pay stub (or the sample numbers in this guide)
A calculator
Pencil and paper
Form W-4, when you start a new job
Step by step
Tick each step as you go if you like; ticks stay on this device.
Math
How it works: Percentages on a pay stub
Social Security and Medicare are flat percentages of your pay. For 2026, Social Security is 6.2% of wages up to $184,500 for the year, and Medicare is 1.45% of all wages. An extra 0.9% Medicare tax is withheld on wages over $200,000 in a year.
To use a percent in math, change it to a decimal by dividing by 100: 6.2% becomes 0.062 and 1.45% becomes 0.0145. Then multiply by gross pay.
Worked example with made-up round numbers: gross pay is $1,000. Social Security is $1,000 × 0.062 = $62.00. Medicare is $1,000 × 0.0145 = $14.50. Say the stub also shows $60.00 of federal income tax and $30.00 of state tax. Total deductions are $62.00 + $14.50 + $60.00 + $30.00 = $166.50. Net pay is $1,000 − $166.50 = $833.50.
Federal income tax isn't one flat percent. It depends on your W-4, how often you're paid, and the tax brackets, so the example simply reads it off the stub.
Social Security = gross pay × 0.062; Medicare = gross pay × 0.0145; net pay = gross pay − all deductions
Try it: Make a pretend pay stub for a $500 week of work. Figure Social Security and Medicare, make up a state tax amount, and work out net pay. Then find what percent of gross pay you kept: net ÷ gross × 100.
Hand your child 10 play bills as 'gross pay,' then take some back for each tax line, so the gap between gross and net feels real.
Let your child check the FICA math on one of your own pay stubs (cover anything private first).
Before a first job, read Form W-4 together and talk through each step.
Talk about what payroll taxes pay for: Social Security mainly funds retirement and disability benefits, and Medicare is a federal health insurance program.
Tips
Use net pay, not gross pay, when you make a budget.
Ask your employer about direct deposit. If you can, split it so part of each check goes straight into savings.
Keep your Form W-2 at tax time. It sums up your pay and the taxes taken out for the year, and it's usually what you need to file.
Review the benefits your employer offers. Some can lower your taxable income.
Common mistakes
Mistake
Instead
Planning to spend your gross pay
Plan with net pay. That's the amount you actually receive after taxes and deductions.
Claiming 'exempt' on Form W-4 when you don't qualify
For 2026 you can claim exempt only if you owed no federal income tax for 2025 and expect to owe none for 2026. To keep it for 2027, you must give your employer a new W-4 by February 16, 2027.
Not updating your W-4 after getting a second job
Two jobs can mean too little tax is withheld. Use Step 2 of the W-4 or the IRS Tax Withholding Estimator.
Never checking the numbers
Check the math each payday. Ask your employer about anything you don't understand.
Free how-to guides for families, with nothing to earn, pass or send in. They follow U.S. rules and sources; your owner's manual, product labels and state and local rules come first. This guide explains how things work; it isn't personal financial, tax or legal advice.
🧾 Read a Paycheck
Name ____________________ Date __________
You'll need
A recent pay stub (or the sample numbers in this guide)
A calculator
Pencil and paper
Form W-4, when you start a new job
Steps
Find the pay period. Look for the dates the paycheck covers and the pay date. Your employer sets the pay schedule, such as every week or every two weeks.
Find gross pay. Gross pay is everything you earned before anything is taken out. If you're paid by the hour, it's your hours times your hourly rate, plus any overtime.
Find federal income tax withholding. This is federal income tax your employer holds back from each check and sends to the IRS for you. The amount depends on your pay and the Form W-4 you filled out.
Check Social Security and Medicare. Together these are called FICA. Social Security is 6.2% and Medicare is 1.45% of the wages they apply to. Multiply your gross pay by each rate and compare with your stub. Your employer pays a matching amount that doesn't come out of your pay.
Look for state income tax. Many stubs show state income tax withheld. Some states have no income tax, so this line may be missing. Rules differ from state to state.
Find other deductions. These can include health insurance and retirement plan contributions. Some, like 401(k) contributions, are taken out before income tax withholding is figured, which lowers your taxable pay.
Check that the math adds up. Add up every deduction and subtract the total from gross pay. The answer should match your net pay, the amount that actually lands in your account.
Read the year-to-date column. YTD shows totals from the start of the year through this paycheck. It tells you how much you've earned and paid in taxes so far this year.
Fill out Form W-4 when you start a job. Everyone fills in Step 1 (your information) and signs Step 5. Fill in Steps 2 to 4 only if they apply to you, such as a second job or dependents. The IRS Tax Withholding Estimator can help you choose.
Update your W-4 after big changes. Check your withholding early each year and after changes like a second job, marriage, or a new child. Too little withheld can mean a tax bill; too much means you wait for that money until your refund.