Reading your paycheck (and your W-2)
Your paystub is the most important financial document you see every two weeks. Most people glance at the net pay and ignore the rest. Let's fix that.
Gross vs. net
Gross pay is what you earned. Net pay is what hits your bank account. The gap is taxes, retirement contributions, health insurance, and other deductions. Understanding each line tells you what's actually in your control.
The big deductions
Federal and state income tax, Social Security and Medicare (FICA), 401(k) contributions, and health insurance premiums make up most of the gap. Pre-tax deductions (traditional 401(k), HSA) lower your taxable income; Roth contributions don't.
- W-4: controls how much federal tax is withheld
- FICA: 7.65%, flat, not optional
- 401(k): your most controllable lever
- Health: pre-tax through an employer plan
Your W-2 at year end
The W-2 is the summary of all the paystubs you got that year. Box 1 is your taxable wages, Box 2 is what your employer already withheld, Box 12 codes show 401(k), HSA, and other contributions. Tax software uses these numbers directly.
See where your paycheck actually goes.
Plug in your salary and a few details. We'll break down the federal, state, FICA, and retirement slices, so you can see what's actually in your control.
% of gross
Rough estimate
Per paycheck (gross)
$2,885
26 paychecks per year
Per paycheck (net)
$2,073
Where it goes (annual)
- Take-home$53,887
- Federal tax$7,351
- State tax$3,525
- FICA$5,738
- 401(k)$4,500
Insight
At a 6% contribution, $4,500 of your income goes into the 401(k) before tax. That alone saves about $416 in federal taxes this year.