pay stub
A document from an employer showing gross pay, deductions, and net pay for a specific pay period.
Example
“Reviewing the pay stub revealed a mistake in the retirement contribution calculation.”
Memory Tip
STUB — your financial receipt from your employer. Review it every pay period.
Why It Matters
Understanding your pay stub is essential for verifying that you are being paid correctly and tracking how much of your income goes toward taxes and other deductions. It helps you monitor your financial situation, plan your budget, and catch any payroll errors that could affect your take-home pay and overall financial health.
Common Misconception
Many people believe that their gross pay is what they actually take home, but the pay stub shows that numerous deductions reduce this amount significantly. These deductions include federal and state income taxes, Social Security, Medicare, and potentially health insurance or retirement contributions, which is why net pay is substantially lower than gross pay.
In Practice
An employee with a biweekly gross pay of 2500 dollars might see deductions of 350 dollars for federal taxes, 150 dollars for state taxes, 155 dollars for Social Security, and 36 dollars for Medicare, resulting in a net pay of 1309 dollars. This pay stub helps the employee understand that while they earn 2500 dollars, they only receive 1309 dollars in their bank account for that pay period.
Etymology
From Old English 'stybb' meaning tree stump — a stub or remnant of the original document.
Common Misspellings
Build a budget and track your spending
Related Terms
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See Also
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