What is a pay stub? Example & best practices

Nothing makes employees happier ‌than being paid on time by an employer they trust. As a small business owner, you can foster trust with your team by ensuring that your employees can access pay stubs with accurate information about the current pay period.

So, what is a pay stub? A pay stub is a statement you create through payroll processing as an attachment to your employee’s paycheck. Keep reading to learn what information you can find on a pay stub and the best practices to follow as an employer and employee.

What is a pay stub?

What are pay stubs used for?

Are pay stubs required in every state?

Is a pay stub the same as a paycheck?

What information is on a pay stub?

Pay stub example

How long should a company keep employee pay stubs?

What employees should do with their pay stubs

Pay stub best practices for 2025

Next steps for streamlining your payroll process

What is a pay stub?

Pay stubs are written pay statements that show each employee’s paycheck details for each pay period. It shows how much they earned, what was deducted (like taxes and benefits), and what they actually took home (net pay). Employers typically generate pay stubs through payroll processing systems and distribute them electronically or in paper form.

What are pay stubs used for?

You might think a pay stub is just a paycheck attachment, but it has several important purposes for both employees and employers. Here are some key reasons why pay stubs are essential.

State paystub requirements

While federal law doesn’t require employers to provide pay stubs, many states have their own rules about whether employees should receive them and in what format.

States that don’t require pay stubs

If your business operates in one of the following states, you are not legally required to provide pay stubs to employees:

• Alabama
• Arkansas
• Florida
• Georgia
• Louisiana
• Mississippi
• Ohio
• South Dakota
• Tennessee

Even though there’s no legal requirement, it’s still a good business practice to provide pay stubs to help employees track their earnings and keep payroll transparent.

States that require access to pay stubs

If your business operates in one of these states, you must provide employees with access to their pay stubs, whether through an online payroll system or paper format.

• Alaska
• Arizona
• Idaho
• Illinois
• Indiana
• Kansas
• Kentucky
• Maryland
• Michigan
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New York
• North Dakota
• Oklahoma
• Pennsylvania
• Rhode Island
• South Carolina
• Utah
• Virginia
• West Virginia
• Wisconsin
• Wyoming

States that require physical pay stubs

Some states have stricter laws and require employers to provide printed or written pay stubs rather than just making them available digitally. If your business is in one of these states, you must issue a physical pay stub or at least give employees an easy way to print one: 

• California
• Colorado
• Connecticut
• Iowa
• Maine
• Massachusetts
• New Mexico
• North Carolina
• Texas
• Vermont
• Washington

States with special pay stub rules

In these states, you can provide electronic pay stubs by default, but employees must have the option to opt out and request paper copies:

• Delaware
• Minnesota
• Oregon

Meanwhile, Hawaii has stricter rules. Before switching to electronic pay stubs, you must get written consent from each employee. If an employee prefers a physical copy, your business is required to provide one.

The important information on a paystub

A pay stub contains information that can help an employee keep track of their income, budget their expenses, and verify the accuracy of their payroll records. Here is what you can typically find on a pay stub:

Gross wages

Gross wages are the full amount an employer pays before deductions. This pay often includes more than the employee’s regular wages. Overtime pay and additional income, such as paid time off, bonuses, and payroll advances, are also included.

Gross pay is calculated differently for salaried and hourly employees. Here is how to calculate both types:

• Salary: Multiply their hourly pay rate by their number of hours worked
• Hourly: Divide their annual salary by the number of pay periods in the year

Typically, pay stubs for hourly workers show the number of hours the employee worked. If the employee works over 40 hours in a week and is eligible for overtime pay, those hours should also be on their pay stub.

Deductions

Deductions are cash amounts taken out of the employee’s gross wages. They include taxes, contributions, and even allowances like meals. Typically, on pay stubs, deductions are shown in two places: 

• Current deductions are deductions being taken out of the current pay period. 
• Year-to-date deductions are totals for each type of deduction.

For instance, FICA taxes are taken out for each pay period. So the pay stub would show an amount deducted for that pay period and the total amount deducted for the year.

Speaking of taxes, they’re one of the largest payroll deductions employees see on their pay stubs. As a business owner, you need to understand these withholdings so you can run payroll correctly and stay compliant with tax laws. 

Here are the types of taxes deducted from paychecks:

Contributions

Contributions are another kind of deduction. But if the contribution comes from the employer, it may be included in the employee’s gross wages. Contributions will vary depending on the benefit opportunities offered by the employer. 

For instance, an employee might request that a small percentage of their paycheck be put toward an employee stock purchase plan (ESPP) or ask to take a small sum out of each paycheck as a nonprofit donation.

Here’s a breakdown of common payroll contributions and how they show up on a pay stub:

Net pay

Net pay is the amount left over from the employee's gross pay after deductions. Net pay is often called take-home pay. It’s the amount the employee receives when paid, either by direct deposit or a paper check.

Depending on the size of the deductions, an employee’s net pay may be significantly lower than their gross pay. On the employee’s pay stub, net pay is recorded for the pay period and cumulatively for the year.

Garnishments

Garnishments only apply to employees who are legally obligated to withhold a portion of their earnings by a court. Child support and large debt payments are example scenarios where courts may require this situation.

Paid time off (PTO)

Your pay stub should always show any period when employees were paid while taking time off. This is important for both employers and employees in case there is a dispute with the payment amount.

Pay period

The pay period section will showcase the period beginning and ending date, the total amount of hours worked, and the date the employee will receive payment.

Pay rate

The pay rate refers to the amount paid for hours worked. If you are a non-exempt employee that qualifies for overtime pay, you should see a pay rate 1.5 times greater than your regular pay rate for weeks you work over 40 hours.

Contact information

The contact information of both the employer and the employee should be readily available on the pay stub to ensure accurate payroll processing. A pay stub will typically include both names and physical addresses.

Pay stub example

If your business is small and doesn’t offer many benefits, your employees’ pay stubs will look pretty simple. Here’s what a simple pay stub might look like:

No matter the length of your pay stub, keep a copy of it for your financial records.

How long should a company keep employee pay stubs?

According to the Fair Labor Standards Act (FLSA), you’re required to keep payroll records, including pay stubs, for at least three years to stay compliant with wage and hour laws.

When it comes to the Internal Revenue Service (IRS), the IRS doesn’t specifically require pay stubs. However, it does mandate that employment tax records be kept for at least four years after the tax is due or paid—whichever comes later.

Also, some states may require you to hold onto payroll records for longer than the federal minimum, so check your state labor department’s website to make sure you’re meeting local requirements.

When in doubt, holding onto payroll records longer is always better than getting rid of them too soon.

Pay stub best practices for 2025

To create a smooth payroll experience, it’s important to keep your financial records and employee data well-organized and secure. 

Reliable accounting software could help keep this information at your fingertips. 

Here are some more tips for handling pay stubs with grace:

• Know all state and local requirements: Payroll laws vary by state, so make sure your business follows the correct rules for pay stub distribution and recordkeeping.
• Include the necessary information: Pay stubs should be clear and detailed, showing earnings, deductions, taxes, and net pay to help employees understand their paycheck breakdown.
• Make pay stubs easy to access: Employees should be able to retrieve their pay stubs quickly and securely, whether through an online portal, email, or paper copies.
• Work with a trusted payroll service company: Using a reliable payroll provider like QuickBooks Workforce makes sure pay stubs are accurate, easy to access, and hassle-free for both you and your employees.

Finally, consider removing any barriers an employee might encounter when trying to retrieve a pay stub. Moments that require employee pay stubs—like applying for a loan or filling out a rental application—can be stressful. As an employer, you can reduce that stress by making it easy for employees to access the necessary documents.

Let’s break down some common barriers to pay stub access and how to remove them: