Guides · Payslip

How to read your payslip

Anatomy of a payslip

Both countries follow the same structure, even though the line labels differ:

1. Gross pay — what you earned for the period before any deductions.
2. Pre-tax deductions — taken out of gross before tax is calculated. Most common: retirement contributions (401(k) in the US, salary sacrifice into a workplace pension in the UK).
3. Taxable pay — gross minus pre-tax deductions. This is the number the brackets run against.
4. Income tax — federal (US) or PAYE (UK), calculated against the brackets for the period.
5. Payroll contributions — Social Security and Medicare in the US; Class 1 National Insurance in the UK.
6. Other deductions — health insurance premiums, wage garnishments, court-ordered child support, student loan repayments, etc.
7. Net pay — what gets paid into your bank account. This is the only number you actually get to spend.

The number on the calculator matches step 7 — net pay — assuming no pre-tax deductions and no post-tax deductions beyond the ones the calculator models. The calculator is a clean baseline, not your exact payslip.

United States payslip

A US paystub (the document you receive each pay period) typically shows the following. The example assumes a single filer in Connecticut earning $80,000/year, paid biweekly.

Three things to notice:

1. FICA vs FIT — Social Security (6.2%) and Medicare (1.45%) are collectively FICA. They are calculated separately from federal income tax and the brackets don't apply to them. The Social Security portion stops at the annual wage base; Medicare does not.
2. Pre-tax vs post-tax — a traditional 401(k) contribution and most Section 125 (cafeteria) health insurance premiums reduce your taxable pay before the brackets run. A Roth 401(k) and an after-tax health premium do not.
3. State tax is a separate line. TaxMetria's US calculator is federal-only by design. Add state tax on top, and your real take-home will be lower.

United Kingdom payslip

A UK payslip (often called a "pay slip" or "wage slip") typically shows:

Notes:

1. PAYE — Pay As You Earn. The employer withholds income tax in real time using HMRC-issued tax codes. The number you see on the payslip is an estimate for the period, settled annually.
2. Class 1 NI — National Insurance contributions are calculated on the same taxable base as income tax but with their own threshold (£12,570) and rates (8% to £50,270, 2% above, for 2026/27). They are separate from the income-tax bands.
3. Salary sacrifice — paying into a workplace pension this way is pre-tax for both income tax and NI, which is part of why it is the most tax-efficient way to save for retirement.
4. Tax code — look for "1257L" on a fresh starter's payslip. That means a £12,570 Personal Allowance. Other letters mean something else (BR = all income at basic rate, for example, after a second job or pension).

What to verify against the calculator

The TaxMetria calculator is the baseline. If your payslip differs from what it predicts, the most common reasons are:

1. Pre-tax deductions you forgot about — 401(k), dental, FSA, salary-sacrifice pension.
2. Multiple jobs — both countries withhold as if each job were your only one. The end-of-year reconciliation catches it.
3. Bonus or commission — typically withheld at a higher flat rate (22% federal supplemental in the US) but reconciled at marginal rates.
4. State or local tax (US) — TaxMetria does not model it.
5. Period mismatch — the calculator runs an annual figure. Your payslip covers a single pay period. Multiply or divide to compare.
6. Mid-year tax-code change (UK) — HMRC sometimes issues a new tax code mid-year. The payslip will reflect the new one; the calculator will not, unless you set your inputs to the year-end code.

If your payslip still disagrees after accounting for all of the above, raise it with your payroll team. They will be able to reconcile the math line by line.

Common pitfalls

• Confusing "gross" with "take-home" — gross is the number your recruiter quoted. Net is the number that actually arrives in your account.
• Forgetting that pension contributions are pre-tax — a £100 contribution to a salary-sacrifice pension costs you about £80 of take-home if you are a basic-rate taxpayer, not £100.
• Ignoring the state line (US) — it is real money, often the difference between staying in one state or moving.
• Trusting the period figure as annual — multiply by the number of pay periods (12 for monthly, 26 for biweekly US, 52 for weekly UK) before comparing.
• Reading "taxable pay" as "the amount I was taxed on" wrong — it is what was left after pre-tax deductions, before the brackets ran. Your actual take-home further deducts NI, student loans, etc.

Year-end documents

Your payslip is for the period. Your end-of-year documents are for the whole story:

• US: Form W-2 — issued by 31 January. Shows total wages (Box 1), federal tax withheld (Box 2), Social Security wages and tax (Boxes 3-4), Medicare wages and tax (Boxes 5-6), and state wages. Use it to file Form 1040.
• UK: P60 — issued by 31 May. Shows total pay, total tax deducted, and total NI for the finished tax year. Use it as proof of earnings, and to check your Personal Tax Account on GOV.UK.
• UK: P45 — issued when you leave a job. Three parts. Part 1 goes to HMRC (or your new employer's payroll); Parts 1A and 2 and 3 go to you.

These documents reconcile what your employer withheld against what you actually owed. If the calculator matches your year-end document, your payslips were right.

Related

• How progressive income tax works — the band walk
• Marginal vs effective tax rate
• Allowances vs deductions vs credits
• Bracket creep and inflation
• US take-home pay calculator
• UK take-home pay calculator
• Methodology — engine, data, and tests