On your paycheck, the net check is the money you actually take home: your gross pay minus every tax and benefit deduction. If your gross is $5,000 for the month but $3,800 lands in your bank account, that $3,800 is your net check. Everything between those two numbers is explained on your pay stub, and most of it falls into two buckets — taxes the government requires, and benefits you signed up for.
Some people call it take-home pay. The terms mean the same thing, whether you get a paper check or a direct deposit.
Net Pay vs. Related Terms
A few words sound alike and get mixed up. Your gross pay is the full amount you earned before anything comes out. Your net pay is what’s left after taxes and deductions. Your disposable earnings are your pay after mandatory taxes but before you’ve paid rent or groceries — this is the figure creditors and courts use when they talk about garnishment. Discretionary income is what remains after both taxes and essential living costs.
For reading your paycheck, net pay is the number that matters: it’s the actual money you can spend.
What Gets Withheld Before You See the Money
Federal law requires your employer to withhold several taxes from every paycheck. These are not optional.
Social Security and Medicare
Together these are called FICA. Social Security comes out at 6.2% of your wages, and Medicare at 1.45%.1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax Your employer pays a matching share on top of what comes out of your check, but that match doesn’t affect your net pay.
Social Security tax stops once your year-to-date wages hit a cap — $184,500 in 2026.2SSA. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet After that point, your net checks for the rest of the year get noticeably larger. Medicare has no cap, so the 1.45% applies to every dollar.
If your wages pass $200,000 in a calendar year, your employer must withhold an extra 0.9% Additional Medicare Tax on anything above that threshold.3Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Your actual tax liability depends on filing status, but payroll withholding kicks in at $200,000 regardless.
Federal Income Tax
Your employer withholds federal income tax based on what you reported on your W-4.4Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source Unlike FICA, this one isn’t a flat percentage. Two people with identical salaries can have very different federal withholding depending on filing status, dependents, and other adjustments.
State and Local Taxes
Most states withhold their own income tax, with top rates running from under 1% to over 13%. A handful of states charge nothing. Some cities and counties add a local tax. A few states also require workers to contribute to state disability insurance, usually under 1.5% of wages. All of these show up on your stub and shrink the net check the same way federal taxes do.
How Your W-4 Changes the Size of Your Check
Form W-4 is the biggest lever you control over your net pay. It tells your employer your filing status, how many dependents you claim, whether you work a second job, any deductions beyond the standard amount, and whether you want extra withheld.5Internal Revenue Service. Form W-4, Employees Withholding Certificate
Never submitted one? Your employer must withhold as if you’re single with no adjustments, which usually produces the smallest net check.5Internal Revenue Service. Form W-4, Employees Withholding Certificate You’ll get that money back as a refund, but the government has used it interest-free in the meantime. If you consistently get a big refund in April, updating your W-4 can put more in each paycheck instead.
For 2026, the standard deduction is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for heads of household.6Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Those numbers are already built into the withholding tables. If your real deductions run well above the standard amount — big mortgage interest, significant charitable giving — noting them on your W-4 lowers withholding and raises your net pay.
Voluntary Deductions You Signed Up For
After taxes, the other big category on your stub is benefits you elected. Each one shrinks your net check, usually in exchange for something you wanted.
Health, Dental, and Vision Premiums
Your share of employer-sponsored medical, dental, and vision coverage is almost always deducted before taxes are calculated. That means a $600 monthly premium reduces your gross pay before FICA and income tax are computed, so your taxable income drops too.
Retirement Contributions
Traditional 401(k) contributions come out before federal and most state income taxes, which lowers your current taxable income. In 2026, the base limit is $24,500. Workers 50 and older can add an $8,000 catch-up for a total of $32,500, and those aged 60 through 63 get an $11,250 catch-up under SECURE 2.0 rules, bringing the ceiling to $35,750.7Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
Roth 401(k) contributions share those dollar limits but hit your paycheck differently. Roth money is included in your taxable income for the year, so it doesn’t reduce current withholding.8Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts A $500 Roth contribution shrinks your net check more than a $500 traditional contribution, because the Roth version doesn’t lower the income used to figure taxes.
HSAs and FSAs
If you’re on a high-deductible health plan, HSA contributions through payroll are excluded from your federal taxable income.9Internal Revenue Service. Publication 525 – Taxable and Nontaxable Income The 2026 limits are $4,400 for individual coverage and $8,750 for family coverage.10Internal Revenue Service. Notice 2026-5 – Expanded Availability of Health Savings Accounts Healthcare FSAs work similarly but with a $3,400 ceiling for 2026 and a use-it-or-lose-it rule. Both reduce your taxable income, but the HSA rolls over year to year.
Life and Disability
Group life and disability premiums often show up on your stub too. Employer-provided group-term life insurance up to $50,000 in coverage is excluded from your taxable income; anything above that is taxable. Disability premiums are sometimes deducted pre-tax, which lowers your current tax but means any benefits you later collect would be taxable.
Pre-Tax vs. Post-Tax: Why a $200 Deduction Rarely Costs $200
Pre-tax deductions come out of your gross before taxes are figured. Post-tax deductions come out after. The difference changes the real cost of each benefit.
A $200 pre-tax deduction doesn’t drop your net check by $200. Because it also reduces the income taxes get calculated on, the net check falls by less. A $200 post-tax deduction, on the other hand, reduces your net check by the full $200, because taxes were already withheld on your gross.
Pre-tax deductions typically include traditional 401(k), health insurance premiums, HSA, and FSA contributions. Post-tax deductions typically include Roth 401(k), after-tax life insurance, and union dues. When you’re comparing benefits during open enrollment, that classification tells you more about the true cost than the sticker price does.
Calculating Net Pay
The formula is simple:
Net Pay = Gross Pay − Mandatory Deductions − Voluntary Deductions
Say your biweekly gross is $3,500. A typical breakdown might look like this:
- Social Security (6.2%): $217.00
- Medicare (1.45%): $50.75
- Federal income tax: $336.00 (depends on your W-4)
- State income tax: $140.00 (depends on your state)
- Health insurance premium: $150.00
- 401(k) contribution at 8%: $280.00
Total deductions: $1,173.75. Net pay: $2,326.25. That’s what hits your account.
Reading Your Pay Stub
Stubs lean on abbreviations. “Fed WH” or “FIT” is federal income tax withholding. “FICA” is the combined Social Security and Medicare tax, though many stubs split them: “SS” or “OASDI” for Social Security, “MED” for Medicare. State income tax usually shows as “SIT” or the state abbreviation followed by “WH.”
Every stub should list your gross earnings, each deduction, and the resulting net pay. Most also show year-to-date totals, which is how you can tell whether you’re nearing the Social Security wage cap or on track to max out your 401(k). No single federal law requires pay stubs, but most states do, and federal recordkeeping rules require employers to keep wage and deduction records for at least three years.
If the Numbers Look Wrong
Mistakes happen. Your employer might withhold too much or too little federal income tax, miscalculate FICA, or apply the wrong benefit deduction. The IRS allows employers to correct federal income tax withholding errors only within the same calendar year the wages were paid.11Internal Revenue Service. Correcting Employment Taxes If they overwithheld, they must reimburse you in the same calendar year for the correction to count. Prior-year errors have far fewer options.
If something looks off, raise it with payroll right away. For federal income tax overwithholding that crosses into the next year without being fixed, you’ll recover the money when you file your tax return, but that could be months of waiting on cash that was yours already. Check your pay stub against your W-4 and benefit elections at least once a quarter, and always review the first stub after open enrollment or a raise.