A payslip is a short summary of a big calculation. Most people look only at the final figure. A minute spent on the other lines tells you where your money goes, and it is the quickest way to catch an error.
Gross, net and everything between
Gross pay is what you earn before anything is taken off. Net pay (also called take-home pay) is what lands in your bank account. Between the two are deductions: some are required by law, such as income tax and social insurance, and some are choices, such as pension contributions or health cover.
When a job advert quotes a salary, it is almost always the gross figure. That is why a salary calculator is useful: it turns the headline number into the amount you can actually plan around.
The usual lines you will see
Names differ by country, but the same ideas appear almost everywhere:
- Income tax: tax on your earnings, worked out under your country's rules and your personal tax code or withholding form.
- Social insurance: National Insurance in the UK, Social Security and Medicare in the US. These pay for pensions, health care and benefits.
- Retirement contributions: a pension, 401(k), superannuation or KiwiSaver amount, taken before or after tax depending on the scheme.
- Student loan repayments, where they apply.
- Other deductions: health insurance, union fees, charitable giving schemes, or a workplace benefit you signed up for.
The year-to-date column
Most payslips show running totals for the tax year. These help you check that the amounts are building up in step: a figure that suddenly drops or stalls can mean a change in your tax code or a missed payment. They are also what you will need when you complete a tax return, or if you change jobs part-way through the year.
Check three things every time
You do not need to audit everything. Three quick checks catch most problems:
- Is your name, tax code or withholding status right?
- Does the gross pay match what you expected for the period, including overtime or any unpaid leave?
- Do the deductions look about the size you would expect? Compare against our calculator for your country if you are unsure.
If something looks wrong
Do not wait. Ask your payroll or HR contact, quoting the line and the period. Mistakes are usually corrected in the next pay run, and a short written message keeps a record. If the issue is with your tax code or withholding, the tax authority in your country can tell you which code or form it holds for you.
Keep your payslips
Keep payslips and year-end statements for several years. They support loan and rental applications, and they are the evidence you need if a tax figure is ever queried. Most employers provide them online, so download a copy and store it somewhere safe.
Calculators for this guide
More tips
- Hourly, Weekly, Monthly or Yearly: Converting Pay Without Mistakes
- Marginal and Effective Tax Rates: Why a Pay Rise Never Costs You Money
- Retirement Contributions and Take-Home Pay: Before Tax or After?
- How to Compare Two Job Offers Properly
- Why Your Real Payslip May Differ From an Online Estimate
- Bonuses and Overtime: Why They Seem to Be Taxed More
- How to Build a Budget From Your Take-Home Pay
- States With No Income Tax: What That Does and Does Not Mean
- Moving for a Job: Will You Really Be Better Off?
- Self-Employed? How Much Should You Set Aside for Tax
- Asking for a Raise: Using Take-Home Numbers to Plan the Conversation
- Student Loan Repayments and Your Take-Home Pay
- A Yearly Tax Check-Up in Thirty Minutes
- All tips and guides
These guides are general information and estimates to help you plan. They are not tax advice. Rules and rates change, so check the official tax authority for your country.