Every paycheck moves through the same sequence: gross pay, a set of deductions, then net pay. Understanding what each deduction is, and whether it comes out before or after tax, makes the rest of this site (contribution limits, tax-advantaged accounts, budgeting) click into place faster.
Gross pay
Everything you earned in the pay period, before anything is taken out: your salary or hourly wages, plus any overtime, bonus, or commission. This is the number usually quoted in an offer letter or salary discussion.
Net pay (take-home pay)
What actually deposits into your bank account, after every deduction below is subtracted from gross pay. This is the number that should drive your actual budget, since it's the money you truly have to work with. See Budgeting.
Pre-tax vs. post-tax deductions
The single most useful distinction on a pay stub. It determines whether a deduction lowers the income tax you owe right now, or not.
Pre-tax deductions
Taken out of your paycheck before income tax is calculated, which lowers your taxable wages for that pay period. A Traditional 401(k) contribution, an HSA contribution made through payroll, and many employer health insurance premiums are common examples. You still owe tax on this money eventually, in the case of a Traditional 401(k), when you withdraw it in retirement, but not now.
Post-tax deductions
Taken out after income tax is already calculated, so they don't reduce this paycheck's taxable wages. A Roth 401(k) contribution is the most common example: you pay tax on that money now, in exchange for tax-free withdrawals later if the requirements are met. See Types of Accounts for the Traditional vs. Roth tradeoff in full.
A worked example
A simplified $5,000 monthly gross paycheck, showing where pre-tax deductions, taxes, and post-tax deductions each apply.
| Line item | Type | Amount |
|---|---|---|
| Gross pay | — | $5,000.00 |
| Traditional 401(k) contribution (6%) | Pre-tax | −$300.00 |
| HSA contribution (payroll) | Pre-tax | −$150.00 |
| Health insurance premium | Pre-tax (typical) | −$120.00 |
| Federal income tax withholding | Based on W-4 | −$520.00 |
| State income tax withholding | Based on state form | −$180.00 |
| Social Security (6.2%) | Payroll (FICA) tax | −$293.26 |
| Medicare (1.45%) | Payroll (FICA) tax | −$68.59 |
| Roth 401(k) or other post-tax deduction | Post-tax | $0.00 |
| Net pay (take-home) | — | $3,368.15 |
Illustrative only. Actual withholding depends on your W-4 elections, state, filing status, and benefits, and real employers vary in what's offered and how it's structured.
How 401(k), HSA, and Social Security actually work on a pay stub
401(k)
A percentage or flat amount you elect is diverted straight into your retirement account before you ever see it, which is what makes it easy to keep contributing consistently. Traditional contributions are pre-tax; Roth contributions are post-tax. Many employers add a match on top, separate from your own paycheck.
HSA
Available if you're enrolled in a qualifying high-deductible health plan. Payroll contributions are deducted pre-tax, and unlike a 401(k), also skip FICA tax. The money is yours regardless of employer, and unused funds roll over every year.
Social Security & Medicare
Not optional: 6.2% and 1.45% of gross wages respectively, withheld automatically. Social Security stops being withheld once your wages exceed the annual wage base for the year; Medicare has no cap, and an additional 0.9% applies above a set income threshold.