What goes on a US payslip
Reviewed by Mellow Editorial Team, HR & payroll content team
A US payslip documents gross pay, every tax and deduction taken from it, and the resulting net pay. Here is what each line means and why it must appear.
Gross Pay
Gross pay is the starting point — the total amount earned before anything is withheld. For salaried employees, it is the annual salary divided by the number of pay periods. For hourly workers, it is hours worked multiplied by the hourly rate, plus any overtime.
Gross pay should also reflect additional compensation paid in that period: bonuses, commissions, shift differentials, and taxable fringe benefits. Getting this figure right matters because every downstream calculation flows from it.
Federal Income Tax Withholding
Federal income tax is withheld based on the employee's Form W-4 and the IRS withholding tables. The US uses a progressive system with brackets ranging from 10% to 37%, so the amount withheld depends on the employee's filing status, pay frequency, and any adjustments they claimed on their W-4.
The payslip should show the dollar amount withheld in that period. It does not need to show the bracket — employees can verify the math themselves if they want to, using their W-4 and the IRS Publication 15-T tables.
FICA: Social Security and Medicare
FICA taxes are split between employee and employer, and both sides must be visible or at least clear to the employee.
Social Security: The employee contributes 6.2% of gross wages, up to the annual wage base. Once an employee's cumulative earnings for the year hit that cap, Social Security withholding stops for the rest of the year. A good payslip shows year-to-date earnings so employees can track where they stand relative to the cap.
Medicare: The employee contributes 1.45% of all covered wages, with no earnings cap. High earners face an Additional Medicare Tax of 0.9% on wages above the threshold for their filing status — the employer withholds this once the employee's wages from that employer exceed the threshold, though the final liability is settled on the employee's personal return.
Employers match the 6.2% Social Security and 1.45% Medicare contributions. These employer-side costs do not appear as a deduction on the employee's payslip (they are not taken from the employee's pay), but some employers include them as an informational line to show total compensation.
State and Local Taxes
State income tax withholding depends entirely on where the employee works. Some states — Texas, Florida, and Washington among them — levy no state income tax, so no withholding line is needed. Others have their own withholding forms, brackets, and rates that produce a separate deduction line.
Beyond state tax, some localities impose their own income taxes or payroll taxes. New York City is a well-known example. If your employees work in a jurisdiction with local taxes, those must appear as their own line items.
Pre-Tax and Post-Tax Deductions
Deductions fall into two categories, and the distinction affects taxable income.
Pre-tax deductions are subtracted before federal (and usually state) income tax is calculated. Common examples include employee contributions to a 401(k) or other qualified retirement plan, health insurance premiums under a Section 125 cafeteria plan, and Health Savings Account contributions. These reduce the employee's taxable gross, so the order of deductions on the payslip matters — show these before income tax is calculated.
Post-tax deductions come out after taxes have been applied. Examples include Roth 401(k) contributions, garnishments, and certain voluntary benefits not run through a Section 125 plan. These do not reduce taxable income.
Each deduction should have a clear label. "Medical — BCBS" is more useful than "Benefit deduction 1."
Net Pay and Year-to-Date Totals
Net pay is gross pay minus all withholdings and deductions. It is the amount deposited or printed on the check.
Year-to-date (YTD) columns are standard practice and genuinely useful. Showing YTD figures for gross pay, each tax, and each deduction helps employees reconcile against their W-2 at year end — the W-2 must be issued to employees and filed with the Social Security Administration by January 31. Discrepancies between an employee's final payslip of the year and their W-2 are a common source of confusion; accurate YTD totals reduce those questions significantly.
If you pay contractors rather than employees, none of this applies — contractors receive a 1099-NEC instead of a W-2, and you do not withhold taxes from their payments. Keeping that distinction clean from the start avoids misclassification risk down the line. For employers managing payroll across multiple countries, how Mellow runs payroll across six countries covers how those requirements differ from the US framework described here.
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