What Are Pay Stub Deduction Codes?

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It's not just employees who can be baffled by pay stubs. Employers have to handle them too. Whatever your position, are you stuck trying to figure out the world of pay stab deduction codes? What do they mean, and how do they work? Luckily, it's simpler than you think. You just need a little basic knowledge of what each is used for.
Here's a simple guide to understanding all the different types of pay stub deduction codes.

Also read: What is a Check Number on a Pay Stub?

What Are Pay Stub Deduction Codes?

When you look at your pay stub, you'll see a series of codes in a column called 'deductions'. Next to those, you'll see a number, and then these numbers are added up at the bottom for a total. This shows you what your employer is taking from your pay stub. Don't worry, there's nothing underhand going on. They have to do this to make sure you're paying tax and making contributions to various systems.
What do some of the common codes mean?

Also read: Can I Cash My Employees Checks?

Federal Income Tax

Federal Income Tax is a tax levied on every working adult in the USA. You have no choice whether to pay this or not! You might see it show up as FED for short, 'Federal Tax' in full, or perhaps 'Fed Tax'. Sometimes, a mistake from your payroll department could mean you've ended up paying the wrong amount of tax. If you want to check the deduction, you can work out how much you should be paying using the income tax brackets.

Also read: Do Banks Verify Pay Stubs ​​​​​​​

State Income Tax

Most states levy a State Income Tax on top of the federal rate. Seven don't, but they do tax their citizens in other ways. Your state tax will often appear on your pay stub clearly, for example, 'Ohio State Tax'. But this might be shortened to initials, such as 'OH ST TX'.

Also read: What is ER Health On a Pay Stub​​​​​​​

What's 'FICA'?

You'll almost definitely see a deduction for FICA on your pay stub, which stands for Federal Insurance Contributions Act. This is what's more commonly called 'social security'. You'll contribute a 6.2% portion of your paycheck towards this system, and so will your employer.

Also read: Does My Employer Have to Give Me A Pay Stub?​​​​​​​

Medicare

Medicare is another social security contribution, though the money is allocated specifically for Medicare use rather than the general social security pot. This is a 1.45% contribution of your pay. It might be on your pay stub as 'MED' or 'FICA MED' or even 'FIM' at times.

Deductions For Benefits

If your employer offers benefits such as life insurance, dental cover, or health insurance, your contributions will be deducted each month when you get paid. These could appear in a number of ways, but for the sake of ease, payroll departments often shorten them. Dental cover might be 'DEN' or 'DENT', for instance.

Learn More About Pay Stubs

Become a pay stub expert by reading our helpful blog. We'll tell you what your pay stub should look like, how to read the rest of it, and what you need to know about important forms like the 1099 and W2. It's much simpler than it sounds! Or if you're an employer looking to create affordable pay stubs online, our paystubs generator will get you going in moments.


Frequently Asked Questions

While there is some level of standardization for certain deduction types, such as taxes and Social Security, specific codes may vary between different payroll systems or companies. It is essential to consult your employer or payroll provider for a list of their specific codes.

Yes, understanding deduction codes can help you calculate your take-home pay. By subtracting the total deductions from your gross pay, you can determine your net pay or the amount you receive after deductions.

Yes, deduction codes may vary based on the country or region in which you are employed. Different countries and regions have different tax and regulatory requirements, which may impact the types and codes of deductions applied to your pay.

To learn more about the deduction codes on your pay stub, consider speaking with your employer, payroll provider, or a human resources representative. Additionally, many payroll providers offer resources or guides to help employees understand their pay stubs and deduction codes.

By familiarizing yourself with the various deduction codes on your pay stub, you can better understand where your money is going and ensure that your deductions are accurate and appropriate.

Pay stub deduction codes refer to the specific codes or abbreviations used on an employee's pay stub to represent various deductions, such as taxes, insurance, or other contributions, taken out of their gross pay.

If you notice an error in your deductions or believe a deduction code has been applied incorrectly, you should contact your employer or payroll provider to discuss the issue and seek a resolution.

Deduction codes can represent various types of deductions, such as federal and state taxes, Social Security, Medicare, health insurance premiums, retirement contributions, and union dues, among others.

Deduction codes can typically be found in a section labeled "Deductions" or "Withholdings" on your pay stub. This section will list each deduction along with its corresponding code and the amount deducted.

Deduction codes help employees and employers understand the various deductions made from an employee's pay, ensuring accuracy and transparency in the payroll process.
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What Are Pay Stub Deduction Codes?
Samantha Clark

A Warrington College of Business graduate, Samantha handles all client relations with our top-tier partners. Read More

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