Net pay is the number you actually get paid, and it comes out of one subtraction:
net pay = gross pay − total deductions
Everything else on a pay stub exists to explain one of those three terms. So the work is really two steps: build gross pay up from what you were paid, then take away what came out of it.
Step 1 — gross pay
Gross pay is the whole amount earned in the period before anything is withheld. How you get there depends on how you are paid.
If you are paid hourly
gross = hours worked × hourly rate, plus anything that is not straight time — overtime, shift differential, a bonus, a reimbursement paid as taxable income. Those extra lines are still part of gross pay; they are just easier to audit if you can see them separately.
If you are paid a salary
A salary is quoted per year, so divide it by the number of pay periods in the year:
| Pay frequency | Periods per year | Gross from a $62,400 salary |
|---|---|---|
| Weekly | 52 | $1,200.00 |
| Bi-weekly (every two weeks) | 26 | $2,400.00 |
| Semi-monthly (twice a month) | 24 | $2,600.00 |
| Monthly | 12 | $5,200.00 |
Bi-weekly and semi-monthly are the pair people mix up most. Both are “about twice a month”, but bi-weekly has 26 periods a year and lands on the same weekday, while semi-monthly has 24 and lands on fixed dates (often the 15th and the last day). Same annual salary, different amount on each stub — and a month that contains two Wednesdays of a pay cycle can quietly contain three cheques.
Step 2 — deductions
Deductions are the lines subtracted from gross. On a stub for an employee they usually fall into two groups, and the difference matters when you are checking a number:
- Pre-tax deductions come out before income tax is calculated — some health insurance premiums, retirement contributions under a traditional 401(k), certain transit benefits. They shrink the wages that taxes are computed on.
- Post-tax deductions come out after — wage garnishments, union dues, life insurance, contributions taken after tax.
What they share is direction: money leaves the paycheck. What they do not share is the base that tax is computed on, which is why “my gross went down a little and my net went down a lot” is usually an explanation about pre-tax lines rather than an error.
One thing that never belongs on the employee side: the employer’s own payroll costs — their share of Social Security and Medicare, unemployment insurance, workers’ compensation. Those are the business’s expense, not a deduction from the worker.
Paystubs does not compute tax lines for you. That is deliberate. Employee withholding depends on tax tables, wage bases and filing elections that change every year, and an internally hard-coded rate would be wrong for somebody on the day we shipped it. You enter each deduction line with an amount you have established elsewhere; the tool adds them up and subtracts them.
Step 3 — the subtraction
Here is a complete stub, worked end to end. Salary $62,400, bi-weekly:
| Line | Amount |
|---|---|
| Regular salary (62,400 ÷ 26) | $2,400.00 |
| Gross pay | $2,400.00 |
| Federal income tax | $412.00 |
| Health insurance | $96.50 |
| Retirement contribution | $120.00 |
| Total deductions | $628.50 |
| Net pay | $1,771.50 |
And the hourly version: 38 hours at $27.50 is $1,045.00, plus a $75.00 taxable reimbursement gives gross $1,120.00; with $210.00 and $45.00 in deductions, total deductions are $255.00 and net pay is $865.00.
Two checks worth running
- Add the deductions back to net. net + total deductions must equal gross exactly. If it does not, a line is missing — commonly a garnishment or a benefit premium that started mid-year.
- Round once, at the end. Every one of these figures is money to the cent; if you carry unrounded values and compare them against a stub that rounds each line, you will find a phantom cent or two.
If you want the arithmetic to happen while you type instead of in a spreadsheet, the generator shows gross, total deductions and net live as you fill the same lines — open the pay stub generator. The hourly pay stub guide covers the basis column and what to do with overtime hours.