How to Understand Your Paystub

So, you’ve just received your paycheck. Maybe it’s been direct deposited into your account, or maybe you’ve got a paper check in hand. Either way, attached (or available online) is something you might glance at and then forget about: your paystub.

But here’s the thing—your paystub provides a lot of important information. It shows exactly how your earnings are calculated, what’s being deducted from your pay, and where your money is going. And if you’ve ever looked at it and thought, “Why is my take-home pay less than I expected?” or “What are all these codes and numbers?”, you’re not alone.

This article breaks down everything you need to know to read your paystub, understand its parts, and make sure it all checks out. Whether you’re an employee trying to make sense of your earnings or a business owner helping your team navigate their compensation, you’ll leave here feeling a lot more confident.

Let’s start from the top.

What is a paystub?

A paystub—also known as a pay statement, paycheck stub, or wage statement—is a summary of how your wages were calculated for a specific pay period. It shows what you earned, what was deducted (items like taxes or benefits), and what you actually get to take home (your net pay).

Paystubs come in either paper or digital form (sometimes both!) and are typically attached to your paycheck or available in your employer’s payroll system. If you're paid by direct deposit, you’ll usually get access to an electronic paystub through a self-service portal or app, like isolved People Cloud.

In short, a paystub is like a receipt for your work. It’s proof of payment and a detailed look at how your compensation is structured—and it’s often used to verify income when applying for loans, housing, or government assistance.

Are paystubs required?

While there’s no federal law that mandates employers provide paystubs, many states—including Maine—require them either in written or electronic form. Providing a paystub helps with:

• Transparency – Employees can clearly see what they’ve earned and what has been taken out.
• Compliance – Paystubs support compliance with wage and hour laws by showing that employees are paid properly.
• Recordkeeping – Both employers and employees need accurate pay records for tax filings, unemployment claims, or loan applications.
• Accountability – Mistakes happen. A paystub gives everyone a chance to spot and fix errors quickly.

In Maine, employers are required to provide detailed pay information to employees each pay period, and each pay period must be at least once every 16 days. These records must also be retained by the business for several years to comply with federal and state regulations.

What information is on a paystub?

Let’s answer a common question: what is actually on a paystub? While formats differ by payroll provider, the key components are generally the same.

1. Employee Information

This includes your name, address, employee ID (if used), and sometimes the last four digits of your Social Security number. The pay period start and end dates and pay date are also shown here.

This section ensures the paystub is connected to the correct person and pay cycle. If anything looks off—like a wrong name or incorrect pay dates—it’s a red flag worth checking.

2. Earnings

This section outlines your gross pay—the total you’ve earned before taxes and deductions.

Here’s what might appear:

• Regular hours and wages
• Overtime pay
• Holiday or premium pay
• Tips (if reported and paid through payroll)
• Bonuses or commissions

For hourly employees, the stub will show your hourly rate and number of hours worked. For salaried employees, you’ll typically see a prorated salary amount.

3. Taxes and Deductions

Paystubs include multiple deductions, broken into:

Mandatory Deductions

These are required by law:

• Federal income tax
• State income tax (not all states have this)
• FICA taxes:
  • Social Security (6.2% of wages up to a limit)
  • Medicare (1.45% of all wages)
  • Additional Medicare tax (0.9% on wages over $200,000/year)
• Federal unemployment tax
• State unemployment tax
• Any other state-required payroll tax withholdings (such as PFML)
  
  

Voluntary Deductions

These are optional and usually based on your benefit elections. Some of these benefits are taken after taxes are deducted, while others may be taken before taxes are deducted. Check out this guide to see how taxes on benefits work.

• Health, dental, or vision insurance
• Retirement contributions (401(k), IRA)
• Health Savings Account (HSA) or Flexible Spending Account (FSA)
• Life or disability insurance
• Union dues or employee contributions to perks

Wage Garnishments

Court-ordered withholdings like:

• Child support
• Tax levies
• Student loan repayments

Employers are required to comply with garnishment orders and must deduct these from employee paychecks accordingly.

4. Employer Contributions

This section isn’t money you see directly, but it’s part of your total compensation. These are amounts your employer pays on your behalf, such as:

• Employer-paid health or dental insurance
• 401(k) match or other retirement contributions
• Unemployment insurance premiums
• Employer share of Social Security and Medicare

Many employees overlook these items, but they’re valuable benefits that should be factored into your overall compensation.

5. Year-to-Date (YTD) Totals

Paystubs also show year-to-date summaries. These include:

• YTD gross pay
• YTD taxes and deductions
• YTD net pay
• YTD hours worked

These figures help you track your earnings and deductions over time. They also come in handy during tax season or when applying for loans or financial aid.

How to read your paystub

Now that you know what’s on a paystub, let’s talk about how to read your paystub and make sure everything looks correct.

Step 1: Confirm your information

Check your name, employee ID, and pay dates. Make sure the pay period reflects the time you actually worked.

Step 2: Review hours and pay rate

Make sure the number of hours worked matches your timecard or schedule. If you're hourly, verify your rate and total earnings.

Step 3: Check gross pay

Is your total pay for the period what you expected? If you’re missing a shift, bonus, or overtime, it may show here.

Step 4: Understand your deductions

This is where you’ll see what’s being taken out of your paycheck. Compare these to your benefit elections or previous paystubs. If anything seems off, ask your HR or payroll contact.

Step 5: Verify net pay

This is the amount actually hitting your bank account. If it’s lower than expected, check your deductions and tax withholdings.

Step 6: Look at YTD totals

It’s easy to ignore these, but they’re helpful for budgeting, understanding tax liability, and keeping track of how much you’ve earned this year.

FAQs about paystubs

What’s the difference between gross pay and net pay?

Gross pay is your total earnings before taxes and deductions. Net pay (also called “take-home pay”) is what you receive after everything is deducted.

Why are taxes deducted from my paycheck?

Employers are legally required to withhold taxes like federal income tax, Social Security, and Medicare to send to government agencies on your behalf. Check out this page for more information on payroll taxes for Maine businesses.

What are voluntary deductions?

These are deductions you opt into, like health insurance, retirement plans, or a flexible spending account. You can typically update these during open enrollment or after a qualifying life event.

Can I access my paystub online?

Most employers today use online payroll systems. You’ll usually get a login at the time of hire, or you can request help from HR or your manager. Paper Trails clients and their employees can log into their self-service portal to retrieve their paystubs (and more!) here.

What if there’s a mistake on my paystub?

Let your employer know right away. Mistakes in hours, rates, or tax deductions should be corrected as soon as possible to avoid issues with payroll and taxes.

Why is my take-home pay different each time?

If your hours change, you receive bonuses, or your deductions fluctuate (such as enrolling in a new benefit), it will impact your net pay. Your paystub helps explain why.

Final thoughts

Whether you’re a business owner trying to support your team or an employee looking to better understand your paycheck, knowing how to read a paystub is a valuable skill.

Your paystub isn’t just a formality—it’s your earnings, your taxes, and your benefits. And when you understand what’s on a paystub, you can catch issues early, plan your finances more effectively, and feel more in control of your compensation.

At Paper Trails, we’re here to support small businesses and their employees every step of the way. Payroll and compliance don’t have to be stressful, and understanding your paystub is a great place to start.