Understanding Paycheck Deductions
Your paycheck stub details the gap between what your employer pays you (gross pay) and what hits your bank account (net pay).
Common Deductions Listed on Paystubs
- Income Tax Withholding: Federal, state, and local taxes based on tax brackets.
- FICA / Payroll Tax: Social Security and Medicare contributions.
- Pre-Tax Retirement: 401(k), 403(b), or Provident Fund contributions.
- Pre-Tax Benefits: Health, dental, vision insurance, and HSA/FSA contributions.
Frequently Asked Questions (FAQ)
How does pre-tax 401(k) affect my paycheck?
Pre-tax 401(k) contributions reduce your taxable income dollar-for-dollar, lowering the amount of income tax withheld from your paycheck.
What is the difference between gross pay and net pay?
Gross pay is your total salary earned before any taxes or withholdings. Net pay is the actual cash deposited into your bank account after all taxes and benefits deductions.
How many paychecks are in bi-weekly vs semi-monthly pay?
Bi-weekly pay results in 26 paychecks per year (paid every two weeks), while semi-monthly pay results in 24 paychecks per year (paid twice a month).