How to Make a Pay Stub: A Complete Step-by-Step Guide
Whether you're a small business owner, a freelancer, or a self-employed contractor, creating an accurate pay stub is an important part of managing your finances and staying compliant with payroll requirements.
What Is a Pay Stub?
A pay stub — also called a paycheck stub, earnings statement, or remittance advice — is a document that accompanies an employee's paycheck. It provides a detailed breakdown of how gross pay was calculated and which deductions were taken out to arrive at the net (take-home) pay.
Even if you are self-employed, a pay stub serves as a verifiable income record for loan applications, apartment rentals, or tax documentation. Landlords, mortgage lenders, and banks routinely request recent pay stubs as proof of income.
What Information Does a Pay Stub Include?
A standard pay stub contains the following information:
- Employer information: Company name, address, and EIN (Employer Identification Number)
- Employee information: Full name, address, and employee ID or Social Security Number (last four digits)
- Pay period dates: The start and end date of the period being paid
- Pay date: The date the payment is issued
- Gross pay: Total earnings before deductions
- Deductions: Federal income tax, state income tax, Social Security, Medicare, and any voluntary deductions
- Net pay: The final take-home amount after all deductions
- Year-to-date (YTD) totals: Cumulative earnings and deductions for the current calendar year
Step-by-Step: How to Make a Pay Stub
Step 1: Gather Employee and Employer Information
Before creating any pay stub, collect the basics: your company's legal name, EIN, and business address. For each employee, you'll need their full legal name, current mailing address, and their W-4 information, which tells you their filing status and any additional withholding they've requested.
Step 2: Calculate Gross Pay
Gross pay is total compensation before any deductions. For salaried employees, divide the annual salary by the number of pay periods per year (e.g., 26 for biweekly). For hourly employees, multiply the hours worked by the hourly rate. Don't forget to add overtime pay: typically 1.5x the regular rate for hours beyond 40 per week.
Salaried: $75,000 ÷ 26 pay periods = $2,884.62 gross per paycheck
Hourly: 45 hrs × $20/hr + (5 hrs × $30 overtime) = $1,050 gross
Step 3: Determine Federal Income Tax Withholding
Use the IRS Publication 15-T (Employer's Tax Guide) or an IRS withholding calculator to determine the correct federal income tax withholding based on the employee's W-4. The amount depends on gross pay, pay frequency, and filing status. The 2026 federal tax brackets range from 10% to 37%.
Step 4: Calculate FICA Taxes
FICA taxes are straightforward: withhold 6.2% of gross wages for Social Security (up to the 2026 wage base of $176,100) and 1.45% for Medicare on all wages. As the employer, you match these amounts. For wages above $200,000 (single) or $250,000 (married), an additional 0.9% Additional Medicare Tax applies.
Step 5: Apply State and Local Taxes
Each state has its own income tax rates and withholding methods. Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — have no state income tax on wages. For all others, consult your state's tax agency for the current withholding tables. Some cities and counties also impose local income taxes.
Step 6: Factor in Other Deductions
After mandatory taxes, add any pre-tax deductions: 401(k) contributions, health insurance premiums, HSA contributions, and FSA contributions reduce taxable gross pay. Then apply any post-tax deductions such as Roth 401(k) contributions, life insurance, or wage garnishments.
Step 7: Calculate Net Pay
Subtract all deductions from gross pay. The result is the employee's net pay — the amount they receive via check or direct deposit. Double-check your math, then update the year-to-date totals for all earnings and deductions.
Net Pay = Gross Pay − Federal Tax − State Tax − FICA − Other Deductions
Step 8: Format and Distribute the Pay Stub
Use payroll software, a spreadsheet template, or a dedicated pay stub generator to format the information cleanly. Many states require employers to provide pay stubs on or before payday. Even states without this requirement benefit from providing them — it creates transparency, reduces payroll disputes, and helps employees with their own budgeting.
Methods for Creating Pay Stubs
Payroll Software
Tools like QuickBooks Payroll, Gusto, or ADP automate calculations, filing, and distribution. Best for businesses with multiple employees.
Spreadsheet Templates
Free Excel or Google Sheets templates are available from the IRS and many state tax agencies. Requires manual updates when tax rates change.
Online Pay Stub Generators
Websites offer pay stub creation for a small fee. Useful for one-off needs like freelancers or self-employed individuals needing income proof.
Accountant or CPA
For complex payroll situations or businesses with 10+ employees, outsourcing to a professional reduces compliance risk.
State Requirements for Pay Stubs
Pay stub laws vary significantly by state. Some states — like California, New York, and Texas — require written or printed wage statements on every payday. Others, like South Carolina, have no specific mandate. To stay compliant:
- Check your state's Department of Labor website for specific requirements
- Determine whether electronic pay stubs are permitted (most states allow them)
- Retain payroll records for at least three years (the federal minimum)
Common Mistakes to Avoid
- Using outdated tax withholding tables (update at the start of each tax year)
- Forgetting to apply the Social Security wage base cap
- Miscalculating overtime for hourly employees
- Leaving out year-to-date totals
- Using incorrect pay period dates
Estimate Your Net Pay First
Before issuing pay stubs, use our free paycheck calculator to estimate federal and state tax withholding for any salary. It covers all 50 states and uses 2026 tax brackets.