Gross pay vs net pay
Gross pay is the total an employee earns in a pay period before anything is taken out. Net pay, often called take-home pay, is what is left after taxes and other deductions are subtracted. On a pay stub, gross pay sits at the top of the calculation and net pay at the bottom.
Gross pay
Gross pay is every earning for the period added together. For an hourly employee that is hours multiplied by the hourly rate, plus any overtime. For a salaried employee it is the annual salary divided by the number of pay periods in the year. Bonuses, commissions and tips reported through payroll are added on top.
Net pay
Net pay is gross pay minus everything withheld. That usually includes:
- Federal income tax, based on the employee’s Form W-4.
- Social Security and Medicare taxes (together called FICA).
- State and local income taxes, where they apply.
- Pre-tax deductions such as health insurance premiums or retirement contributions.
- After-tax deductions such as garnishments or some voluntary benefits.
Reimbursements for expenses are sometimes added after deductions, because they repay a cost rather than count as earnings.
A worked example
These figures are illustrative only. They show the arithmetic, not real tax amounts, which depend on the year, the state and the employee’s W-4.
| Line | Amount |
|---|---|
| 40 hours × $25.00 | $1,000.00 |
| Gross pay | $1,000.00 |
| Taxes withheld (all types) | −$180.00 |
| Health insurance premium | −$60.00 |
| Retirement contribution | −$40.00 |
| Net pay | $720.00 |
Why the difference matters
Employers budget on gross pay, because that is the wage they agreed to. Employees budget on net pay, because that is what arrives. Salary offers and pay rates are almost always quoted as gross, so it is worth knowing roughly how much comes off before comparing jobs or planning expenses.
Questions
Is salary quoted as gross or net?
Gross. A $52,000 salary is the amount before taxes and deductions.
Where do I find gross and net pay on a pay stub?
Gross pay is the total of the earnings section. Net pay is usually the largest or most prominent figure, often labeled net pay or take-home pay.
Sources
- IRS — Topic no. 751, Social Security and Medicare withholding rates
- IRS — About Form W-4, Employee’s Withholding Certificate
- IRS — Publication 15 (Circular E), Employer’s Tax Guide
Official sources checked September 23, 2026. This guide explains how pay documents work; it is not tax or legal advice.