Your payslip (or pay stub) is a critical document that details your pay for a given period. It can be full of confusing codes and acronyms. Let's demystify it by breaking it down into three simple parts.
1. Gross Pay: The "Before" Number
This is the total amount of money you earned *before* any taxes or other deductions are taken out. It's the "top-line" number.
Your Gross Pay is typically made up of:
- Base Pay / Salary: Your standard hourly wage or annual salary, broken down for this pay period.
- Overtime: Any hours worked beyond your standard hours, often paid at a higher rate.
- Bonuses & Commissions: Any extra pay you earned for performance or sales.
All of these are added together to get your total Gross Pay.
2. Deductions: The "Taken Out" Numbers
This is the part that causes the most confusion. Deductions are all the amounts *subtracted* from your Gross Pay. They usually fall into two categories.
Statutory Deductions (Mandatory)
These are the ones required by law.
- Income Tax: Tax paid to the government based on your earnings.
- National Insurance / Social Security: Contributions you make to be eligible for state benefits, like pensions or unemployment.
Voluntary Deductions (Optional)
These are deductions you've agreed to, often for benefits.
- Health Insurance: Your contribution to a workplace health plan.
- Pension / 401(k): Money you're saving for retirement.
- Other: Could include things like union dues, charitable donations, or student loan repayments.
3. Net Pay: The "After" Number
This is the one you really care about: the final amount of money that will be deposited into your bank account.
Gross Pay - Total Deductions = Net Pay (Your Take-Home Pay)
Always check this number against what you were expecting. Mistakes can happen! Understanding these three parts makes your payslip much less intimidating and empowers you to know exactly where your money is going.