What Is a Paystub? Essential Guide for Employers

A paystub (also called a paycheck stub or wage statement) is a document that shows an employee's earnings, deductions, and net pay for a specific pay period. While the actual payment is frequently delivered by a physical paycheck or direct deposit, the paystub provides a detailed breakdown of how that amount was calculated — including gross wages, tax withholdings, benefit deductions, and year-to-date totals.

Most states mandate that employers give employees access to itemized statements at the time they are paid, whether in paper or electronic format. These documents serve as essential records for employees when filing taxes, applying for loans, verifying income, or resolving payroll discrepancies. Understanding what belongs on a paystub and how to deliver them correctly helps you meet legal obligations while building trust and transparency with your team.

What Is a Paystub?

A paystub is a document that itemizes an employee's compensation for a given pay period. It serves as a transparent record showing how you calculated the amount the employee actually received in their physical paycheck, direct deposit, or other payment method.

Think of the paystub as the receipt for an employee's paycheck. While the paycheck itself (whether physical check or electronic transfer) represents the net amount paid, the paystub explains the journey from total earnings to take-home pay.

This distinction is important: the paycheck, direct deposit, etc. are the payment methods, while the paystub is the detailed statement accompanying that payment.

Required Information on a Paystub

Though specific requirements vary by state, most paystubs include these core elements:

• Gross Pay: The total amount earned before any deductions, including regular wages, overtime, bonuses, commissions, and other compensation
• Deductions: All amounts subtracted from gross pay, broken down by category. This includes tax withholdings (federal, state, local), insurance premiums, retirement contributions, garnishments, and other authorized deductions
• Net Pay: The final amount the employee receives after all deductions — their actual take-home pay
• Pay Period Information: The start and end dates of the work period covered by this payment, plus the actual payment date
• Year-to-Date (YTD) Totals: Cumulative amounts for earnings and deductions from the beginning of the calendar year through the current pay period
• Hours Worked: For nonexempt employees, the number of regular and overtime hours worked during the pay period
• Rates of Pay: Hourly rate or salary amount, including rates for overtime or different job classifications (if applicable)
• Employer and Employee Information: Company name and address, employee name, and often the employee's identification number.

Physical vs. Electronic Paystubs

Traditionally, employers provided paper paystubs with physical paychecks or direct deposit notifications. Today, many businesses use electronic paystubs (e-stubs) delivered through online payroll portals or employee self-service systems.

Electronic paystubs offer reduced costs, immediate access from any device, automatic archiving, and easier storage for both employers and employees. However, you must comply with state laws regarding access and delivery. Many states allow electronic delivery if employees can view paystubs without restrictions, print copies if needed, store or download paystubs for their records, and access them without fees or complicated processes.

Some states require written consent before switching to electronic-only paystubs, while others allow electronic delivery as the default. Always check your state's specific requirements before implementing electronic paystub systems.

How To Read a Paystub

Understanding how to read a paystub helps you verify accuracy and explain the document to employees who have questions. While paystub formats vary, most follow a similar structure with distinct sections for earnings, deductions, and totals.

Paystub Header Information

The top section displays identifying information: company name and address, employee's full name, employee ID number, pay period dates (start and end), payment date, and check number (if applicable). This establishes who the payment is from, who it's for, and what time period it covers.

Understanding Your Earnings

The earnings section breaks down all compensation before deductions:

• Regular Wages: Standard hourly pay × hours worked, or salary amount for the period.
• Overtime Pay: Premium pay (typically 1.5) for hours beyond 40 per workweek though state law may be more generous.
• Other Earnings: Bonuses, commissions, holiday pay, vacation pay, sick pay, or shift differentials.

For hourly employees, this section shows hours worked by category (regular, overtime) with corresponding rates. Salaried employees see their salary proportion, typically determined by dividing their annual salary by the number of pay periods per year. Most paystubs include a year-to-date (YTD) column showing cumulative gross earnings from January 1 through the current pay period — these figures should match what appears on the year-end W-2.

Deductions Explained

This section itemizes amounts subtracted from gross pay.

Tax withholdings (mandatory):

• Federal Income Tax (FIT): Based on W-4 elections and IRS withholding tables.
• Social Security (FICA-OASDI): 6.2% of wages up to annual wage base limit.
• Medicare (FICA-MED): 1.45% of all wages (plus 0.9% Additional Medicare Tax for high earners above certain thresholds).
• State Income Tax (SIT): State-level withholding if applicable.
• Local Income Tax: City, county, or school district taxes where imposed.

Pre-tax deductions (reduce taxable income before calculating taxes):

• Health insurance premiums (medical, dental, vision)
• Retirement contributions (401(k), 403(b))
• Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA)
• Transportation benefits (transit passes, parking up to IRS limits)

These deductions lower federal and state income tax withheld, though most still count for Social Security and Medicare purposes.

Post-tax deductions (taken after taxes are withheld):

• Roth retirement contributions
• Supplemental life or disability insurance premiums
• Wage garnishments (court-ordered for child support, unpaid taxes, defaulted loans)
• Union dues
• Charitable contributions

Some paystubs also show employer-paid benefits that don't reduce take-home pay but represent part of total compensation: 401(k) matching contributions, employer's share of health insurance premiums, and employer-paid life or disability coverage.

Each deduction line typically shows both the current period amount and year-to-date total.

Net Pay

The bottom shows the net pay calculation:

Gross Pay - Total Tax Withholdings - Total Pre-Tax Deductions - Total Post-Tax Deductions = Net Pay

This "net pay" or "take-home pay" is the actual amount deposited or paid by check. For direct deposit, this section may show which bank account(s) received payment and amounts if split among multiple accounts.

Common Abbreviations

Common paystub abbreviations:

What Employers Should Know About Paystubs

Providing accurate paystubs goes beyond good communication—it's a legal requirement in most states with specific rules about content, delivery, and record-keeping.

Legal Requirements by State

Paystub laws vary significantly by state and, where access requirements are concerned, generally fall into three categories:

• Access States: Require employers to provide paystubs or make them accessible to employees (most states)
• Access/Print States: Require paystubs and ensure employees can print copies without fees
• No Requirement States: Nine states (Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Ohio, South Dakota, Tennessee) have no specific paystub laws, though employers often provide them as best practice

Even in states without requirements, you may still need to provide paystubs under union contracts, employment agreements, or industry-specific regulations. Some states have detailed requirements about paystub content, while others have less prescriptive rules. Check your state's labor department website or consult a payroll professional for specific obligations.

Providing Access to Paystubs

Your distribution method depends on state laws, payroll system, and employee preferences:

• Paper Paystubs: Printed and distributed with paychecks or on payday — works well for small teams or employees without regular computer access.
• Electronic Delivery Via Email: PDF paystubs emailed directly — simple but raises security concerns.
• Employee Self-Service Portals: Online payroll platform access — most common modern method offering the best combination of convenience, security, and recordkeeping.
• Mobile Apps: Smartphone access to paystubs and other HR tasks.

If you provide electronic paystubs, ensure employees can genuinely access them with free access (no fees to view or print), reasonable access (user-friendly system accessible from personal devices), print capability (required in many states), permanent access to historical paystubs, and device flexibility (accessible from personal computers or smartphones, not just company devices).

Some states require written consent before transitioning from paper to electronic paystubs. Others require paper copies upon request even if electronic is standard. If an employee lacks regular technology access, you may need to provide paper paystubs.

Regardless of method, ensure timely distribution, protect sensitive data, maintain delivery records, provide alternative access for technical difficulties, and communicate clearly about access and support.

Record Retention and Compliance

The Fair Labor Standards Act (FLSA) requires employers to keep payroll records for at least three years, though many states require longer. Best practices include: storing digital and paper copies securely with backup systems, restricting access to authorized personnel, following data privacy regulations, maintaining records for terminated employees per legal requirements, and migrating historical data when switching payroll systems.

Accurate paystubs are essential. Incorrect withholding amounts or wage violations can lead to penalties, fines, lawsuits, and eroded employee trust.

To maintain accuracy:

• Verify employee information when changes occur
• Double-check calculations for complex pay scenarios
• Review paystubs before distribution each pay period
• Reconcile YTD totals regularly
• Update tax tables when they change
• Track and document manual adjustments

Common mistakes to avoid:

• Incorrect hours or rates (failing to apply overtime rates correctly or using outdated rates after pay increases)
• Missing deductions (forgetting benefits, garnishments, or authorized withholdings)
• Wrong tax withholding (using outdated W-4 information or incorrect tax tables)
• YTD calculation errors (cumulative totals that don't match individual pay periods)
• Misclassified earnings (listing taxable bonuses as non-taxable reimbursements)
• Retroactive pay mistakes (incorrectly calculating back pay or raises for past periods)

Regular audits and employee feedback help catch and correct issues before they become patterns.

Correcting Paystub Errors

When you discover a paystub error, address it promptly:

• Immediate Correction: If the error affected take-home pay, issue corrected payment immediately — don't make employees wait until the next pay period.
• Documentation: Note the original error, correction made, and date in payroll records.
• Employee Notification: Explain the error and correction. For overpayments, discuss repayment options before making deductions (many states require written authorization).
• Year-End Reconciliation: Ensure corrections appear on W-2s. If errors are discovered after W-2 issuance, file corrected W-2c forms.
• Process Improvement: Analyze the cause and implement safeguards to prevent recurrence.

For tax withholding errors, consult a payroll professional about reporting requirements to tax agencies.

How Paychex Can Help

Managing paystubs manually consumes valuable time you could spend growing your business. Paychex simplifies the entire process with automated solutions designed specifically for small business needs.