Most employees have questions about their pay stub at some point — and most employers have had to explain it. This guide walks through every common line item so you can answer those questions confidently.
Gross Pay vs. Net Pay
Gross pay is what the employee earned before any deductions. It’s the number you agreed to when you set the salary or hourly rate.
Net pay (take-home pay) is what actually hits their bank account — gross pay minus all deductions.
The gap between gross and net surprises a lot of new employees. For a $1,000 gross paycheck, net pay might be $720–$780 depending on state, filing status, and benefits.
Federal Income Tax Withholding
This is withheld on behalf of the IRS and applied to the employee’s federal income tax bill at year end. The amount depends on:
- Gross wages for the period
- Pay frequency (weekly, biweekly, monthly)
- W-4 elections — filing status (single/married/HoH), additional withholding, dependents claimed
An employee who files single with no adjustments will have more withheld than one who files married with dependents. Neither is “more correct” — it just affects whether they get a refund or owe taxes in April.
Employees can update their W-4 at any time. The new withholding takes effect on the next paycheck.
State Income Tax Withholding
Withheld for the employee’s state income tax. For New England:
| State | Rate | Notes |
|---|---|---|
| Massachusetts | 5.0% flat | All wages taxed the same |
| Connecticut | 2.0%–6.99% | Graduated brackets |
| Rhode Island | 3.75%–5.99% | Graduated brackets |
| Vermont | 3.35%–8.75% | Graduated brackets |
| New Hampshire | 0% | No income tax on wages |
| Maine | 5.8%–7.15% | Graduated brackets |
New Hampshire is the outlier — no withholding on wages, so you won’t see this line for NH employees.
Social Security (OASDI)
Rate: 6.2% on wages up to $176,100
This goes to the Social Security trust fund. Both the employee and employer each pay 6.2%. Once the employee’s year-to-date wages hit $176,100, this deduction stops for the rest of the year.
On a pay stub, you might see this labeled: Social Security, OASDI, or SS Tax.
Medicare (HI)
Rate: 1.45% on all wages (no cap) Additional rate: 0.9% on wages over $200,000 (single filers)
Medicare has no wage cap — it applies to every dollar earned. High earners (over $200,000) pay an additional 0.9% employee surtax. Employers do not pay the additional 0.9%.
On a pay stub: Medicare, Med Tax, or HI.
MA PFML (Massachusetts employees only)
Employee rate: 0.88% total (medical + family leave portions)
- Medical leave: 0.70% (up to $176,100)
- Family leave: 0.18% (up to $176,100)
For employers with fewer than 25 employees, employees pay the full 0.88%. For larger employers, the medical portion is split — employees pay 0.28% and employers pay 0.42%.
Pre-Tax Deductions (Benefits)
These come out of gross pay before taxes are calculated, reducing the employee’s taxable income:
401(k) / 403(b) Contributions
Reduces federal and state income tax, but not Social Security or Medicare. A $200/biweekly 401(k) contribution saves the employee roughly $44–$56 in income taxes (at 22–28% combined federal/state rate).
Health Insurance (Section 125 / Cafeteria Plan)
If offered through a Section 125 plan (most employer-sponsored plans are), premiums reduce both income tax AND FICA. This is the most tax-efficient deduction on the pay stub.
HSA Contributions (Health Savings Account)
Like 401(k), reduces income tax but not FICA if contributed through payroll.
Post-Tax Deductions
These come out after taxes are calculated — so they don’t reduce the tax burden:
- Roth 401(k) contributions (taxed now, tax-free later)
- Garnishments (court-ordered child support, debt)
- Voluntary post-tax benefits
Year-to-Date (YTD) Columns
Most pay stubs show both current-period and YTD totals. The YTD column matters for:
- Social Security: Once YTD hits $176,100, SS withholding stops
- PFML: Same $176,100 cap
- FUTA/SUTA employer side: First $7,000 (FUTA) and $15,000 (SUTA) of YTD wages
Sample Pay Stub Walkthrough
Employee: Jane, biweekly pay, $52,000 salary, MA, single, one dependent, health ins.
| Line | Amount |
|---|---|
| Gross pay | $2,000.00 |
| Federal income tax | − $147.00 |
| MA state income tax | − $100.00 |
| Social Security (6.2%) | − $124.00 |
| Medicare (1.45%) | − $29.00 |
| MA PFML employee share | − $17.60 |
| Health insurance (pre-tax) | − $150.00 |
| 401(k) contribution (5%) | − $100.00 |
| Net pay | $1,332.40 |
Jane earns $2,000 and takes home $1,332 — a 33% combined deduction rate.
Use the OtterDesk payroll calculator to generate an accurate pay stub breakdown for any employee in any New England state, with all 2025 tax rates applied automatically.