What is a pay stub?
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Updated 2:06 p.m. UTC Oct. 24, 2023
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What is a pay stub?
A pay stub is a document issued by an employer to an employee showing gross pay for a set payment period, payroll deductions subtracted from the gross pay and the resulting net pay. Depending on employee benefits, you may also find imputed income on a pay stub. Typically, employees receive a pay stub with every paycheck, though that’s not a legal requirement in every state.
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How to read a pay stub
Pay stubs usually read either left to right or top to bottom. In the left-hand section, you’ll find the gross compensation for the given pay period. This can include things like salary, commissions, bonuses and overtime hours. You will also see an accounting of your gross pay, deductions and net pay for the year up to the date of the pay statement.
In the middle column, there are payroll deductions. Payroll deductions can include:
- Federal, state and local income tax withholding.
- The employee portion of Social Security and Medicare (FICA) taxes.
- The employee portion of health insurance deductibles.
- Contributions to flexible spending accounts (FSA) or health savings accounts (HSA).
- Contributions to pre-tax retirement accounts, like 401(k)s, 403(b)s or pensions.
- Contributions to post-tax retirement or investing accounts, like Roth IRAs, 529 accounts or ABLE accounts.
- Court-ordered payments, like child support, alimony, debt payments or back tax garnishments.
When you subtract payroll deductions from the total gross pay, you get the net pay (the number in the right-hand column). The net pay is what should be written on the employee’s paycheck or deposited into their bank account via ACH transfer.
State law pay stub requirements
While the Fair Labor Standards Act (FLSA) requires employers to track and keep a two- to three-year record of employees’ hours and pay, there is no federal requirement for employers to issue a pay stub. This void in federal legislation is commonly filled by state law.
These states require employers to offer physical, printed pay stubs. Technically, some of them allow you to issue a digital pay stub, but only if you provide your employees free access to a printer:
- California
- Colorado
- Iowa
- Massachusetts
- New Mexico
- North Carolina
- Vermont
The following states require the issuance of either printed or digital pay stubs:
- Alaska
- Arizona
- Idaho
- Illinois
- Indiana
- Kentucky
- Maryland
- Michigan
- Missouri
- Nevada
- Nebraska
- New Hampshire
- New Jersey
- New York
- North Dakota
- Oklahoma
- Pennsylvania
- Rhode Island
- South Carolina
- Utah
- Virginia
- Wisconsin
- Wyoming
Some employees may not want to access their pay stubs digitally. Instead, they may want a hard copy. These states have a legal allowance that permits employees to opt in or out of digital delivery:
- Connecticut
- Delaware
- Minnesota
- Oregon
- Washington (state)
- West Virginia
Hawaii and Montana take this optionality a step further. They are the only states that require employees to opt-in to digital delivery in writing. If they don’t, the employer is required to continue providing the default paper pay stubs.
However, not all states have pay stub requirements. If you operate in any of these states, the employer may not be required to issue pay stubs at all:
- Alabama
- Arkansas
- Florida
- Georgia
- Louisiana
- Maine
- Mississippi
- Ohio
- South Dakota
- Tennessee
- Texas
Then there’s Kansas, where employers are only required to provide pay stubs if the employee requests them.
Even in states that don’t have a pay stub requirement, it’s extremely rare to come across an employer who doesn’t follow suit. In fact, refusing to issue pay stubs can come off as a bit dubious,” said Michele Cagan, CPA.
“The only circumstances I can imagine where they’d refuse would be if something shady was going on.”
“If someone isn’t getting pay stubs and wants to, they should contact the employer first. If the employer refuses, the employee may need to sue to get access to those records if it’s a state requirement to provide them.”
Regardless of whether or not an employer is required to issue pay stubs, workers can still submit wage claims, whether they’re W2 or 1099 workers.
How long should employers and employees keep pay stubs?
Employers are required to keep records of hours worked and pay issued for three years under the FLSA. Your state may have stricter laws, though. For example, in Hawaii, employers must hold onto pay stubs for six years. Employees are typically encouraged to hold onto their pay stubs for one year to give the employee enough time to ensure the information contained on the W2 is correct.
It may be advisable to bump the one-year number up or down by a few months, depending on when the employee reviews their W2. This usually happens when they’re filing federal income taxes rather than when the W2 is issued in January. Some tax filers may choose to file in January, while many others wait until closer to the mid-April deadline.
How do employers generate pay stubs?
If you’re a small business, you may not have the revenue to staff an in-house payroll specialist. According to the Society for Human Resource Management (SHRM), more than half of companies with 500 employees or less outsource payroll to an outside payroll services firm, contractor or payroll software.
Some of the best payroll software options include Rippling, Patriot Software and Roll by ADP.
Featured payroll software offers
OnPay
Monthly fee
$40 per month plus $6 per employee
Direct deposit
Yes
SurePayroll
Monthly fee
$29.99 per month plus $5 per employee
Direct deposit
Yes
Gusto
Monthly fee
Starting at $40 plus $6 per month per employee
Direct deposit
Yes
Rippling
Monthly fee
$35 per month + $8 per user
Direct deposit
Yes
Frequently asked questions (FAQs)
As an employer, you may be required to issue pay stubs by state law. As an employee, your pay stubs can alert you to any errors the payroll department made with their math, or they can help you identify any areas where you’d like to contribute a larger portion of your paycheck — like to your retirement accounts, FSA or HSA. Many lenders also require pay stubs to prove your qualification for a loan.
In most states, the answer is yes, though there are some exceptions. Even if your state does not require you to provide pay stubs, doing so is still best practice. Not doing so may cause employees to question the ethics or legitimacy of your business and its pay policies. Pay stubs can also help you prove accurate pay distribution should you need to.
Yes, pay stubs are different than paychecks. A paycheck is a physical document that you cash at the bank. A pay stub accounts for your gross pay, net pay and payroll deductions. If a physical paycheck is issued, it is usually accompanied by a pay stub that accounts for the amount of the paycheck. If you are paid by ACH direct deposit, your pay stub is likely issued on its own or as a digital document.
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