A yearly paycheck checkup means reviewing your W-4, your benefit elections, your retirement and HSA contributions, and your state and local taxes, then comparing them with a current pay stub. Doing it once a year, ideally before or during open enrollment, catches errors and keeps your withholding close to what you will actually owe.
Small changes add up. A different 401(k) rate, a new health plan or a life event can shift your take-home pay by hundreds of dollars a month. This checklist walks through each item, with a worked example for a married couple.
When to do your paycheck checkup
Once a year is a good baseline. Many people tie it to open enrollment, when they can change benefits anyway, or to the start of a new year, when tax figures and contribution limits update. Also do a quick review after any of these:
- Marriage, divorce, or a new child
- A raise, new job or second job
- A spouse starting or stopping work
- A move to a new state or city
- A large refund or a balance due on your last return
Step 1: Read a current pay stub line by line
Start with a normal pay stub, without bonuses or overtime. Check that your name, address, filing status and pay rate are correct. Look at each deduction and make sure you recognize it. Then check the year-to-date totals. Our guide to reading your pay stub explains every section.
Compare the stub with an estimate from the paycheck calculator. If the two are far apart, find out why. It could be a deduction you forgot about or a payroll error worth raising with HR.
Step 2: Review your W-4
A W-4 doesn't expire, so the one you filled out years ago may still be in use. It may no longer match your life. Check:
- Filing status: married filing jointly, single or head of household changes your withholding.
- Multiple jobs or a working spouse: Step 2 of the W-4 handles this. Skipping it can lead to too little tax withheld.
- Dependents: Step 3 reduces withholding for qualifying children and other dependents.
- Other income or deductions: Step 4 lets you add extra withholding or account for deductions.
The IRS Tax Withholding Estimator uses your pay stubs to suggest W-4 entries. Our guide on how to fill out a W-4 walks through each step.
New federal deductions for qualified tips, qualified overtime pay, seniors and some car-loan interest are claimed on your tax return and generally don't change standard paycheck withholding. The IRS explains them on its One Big Beautiful Bill provisions page.
Step 3: Check retirement and HSA contributions
Your annual checkup is a good time to raise your savings rate and confirm you are within the 2026 limits:
| Account | 2026 limit |
|---|---|
| 401(k), 403(b), 457 employee deferral | $24,500 (plus $8,000 catch-up at 50+; $11,250 at ages 60-63) |
| IRA | $7,500 (plus $1,100 catch-up at 50+) |
| HSA, self-only coverage | $4,400 |
| HSA, family coverage | $8,750 |
To contribute to an HSA, you need a qualifying high-deductible health plan. For 2026, that means a minimum deductible of $1,700 for self-only or $3,400 for family coverage. See 401(k) contribution limits for 2026 for details.
Worked example: a paycheck checkup for a Michigan couple
Say one spouse earns $120,000 in Michigan, paid semimonthly (24 paychecks), and the couple files jointly. Michigan taxes income at a flat 4.25% with a $5,900 personal exemption per person. At their checkup, they consider raising the 401(k) from 5% to 8% and adding a $200-per-paycheck HSA contribution through a cafeteria plan. The calculator estimates:
| Scenario | 401(k) per paycheck | HSA per paycheck | Taxes per paycheck | Take-home per paycheck |
|---|---|---|---|---|
| Current: 5% 401(k) | $250.00 | $0 | $951.81 | $3,798.19 |
| 8% 401(k) | $400.00 | $0 | $927.43 | $3,672.57 |
| 8% 401(k) + HSA | $400.00 | $200.00 | $879.63 | $3,520.37 |
Raising the 401(k) by $150 per paycheck lowers take-home pay by only $125.62. Adding $200 to the HSA lowers it by $152.20, because payroll HSA contributions through a cafeteria plan reduce federal income tax, Michigan tax, Social Security and Medicare. Over a year, that is $9,600 into the 401(k) and $4,800 into the HSA, both within the 2026 limits. All figures are estimates; check yours on the Michigan paycheck calculator.
Step 4: Review benefits and other deductions
During open enrollment, look at each benefit you pay for through payroll:
- Health, dental and vision: compare premiums and deductibles. A cheaper premium with a higher deductible might pair with an HSA.
- FSA or dependent care FSA: estimate next year's costs carefully, since unused FSA money may be lost depending on plan rules.
- Life and disability insurance: make sure coverage still fits your family.
- Commuter benefits and other extras: drop anything you no longer use.
Pre-tax deductions lower taxable pay, so each one changes your take-home pay by less than its full cost. Our guide to pre-tax vs. after-tax deductions explains how.
Step 5: Confirm state and local taxes
Make sure your employer withholds for the right state, especially if you moved, work remotely or live in one state and work in another. Many states have their own withholding form, separate from the federal W-4.
Local taxes matter too. Detroit and about two dozen other Michigan cities levy a city income tax, as do many cities in states like Ohio. Check that the right local tax shows on your stub. Our state calculator directory notes local taxes for each state.
Frequently Asked Questions
How often should I update my W-4?
Review it at least once a year and after major life or income changes. A W-4 stays in effect until you submit a new one.
What is the best time for a paycheck checkup?
Open enrollment is a natural time, since you can change benefits then. Early in the year also works, after new limits and tax figures take effect.
Does raising my 401(k) cut my take-home pay dollar for dollar?
No. Traditional 401(k) contributions lower your income tax withholding, so take-home pay drops by less than the amount you contribute.
What if my pay stub doesn't match the calculator?
Check for deductions, local taxes or W-4 settings the estimate didn't include. If something still looks wrong, ask your payroll or HR team.
Sources
- IRS: About Form W-4
- IRS Tax Withholding Estimator
- IRS: 401(k) limit increases to $24,500 for 2026
- IRS Revenue Procedure 2025-19 (HSA limits)
Run the numbers for your state
Written and checked against IRS, Social Security Administration and state tax agency publications for the 2026 tax year. General information, not tax, legal or financial advice. Read our editorial policy, calculation methodology and sources.