Gross Pay vs Net Pay: What Each Means and How to Figure Take-Home Pay

Gross pay vs net pay: the short answer

Gross pay is everything you earn in a pay period before anything is taken out. Net pay, or take-home pay, is what reaches your bank account after taxes and deductions. The difference between gross pay vs net pay, often shortened to gross vs net pay, is the list of deductions on your pay stub.

Net pay = gross pay − pre-tax deductions − taxes − after-tax deductions

Salaries, hourly rates and job offers are quoted as gross pay, but your budget runs on net pay, so it helps to see how gross pay vs net pay plays out on a real stub. For a tour of every line on a stub, see What Is a Pay Stub? Every Line Explained.

What is gross pay? Hourly, salaried and overtime pay

The gross pay meaning is the same for every worker: total earnings for the period, including regular pay, overtime, bonuses, commissions, tips and paid leave.

• Hourly: hours × rate, plus overtime. Fictional example: 40 hours × $18.00 = $720.00, plus 6 overtime hours × $27.00 = $162.00, for gross pay of $882.00.
• Salaried: yearly salary ÷ number of pay periods. A $62,400 salary paid every two weeks is $2,400.00 gross per paycheck.

Under the federal Fair Labor Standards Act (FLSA), covered non-exempt employees earn at least one and a half times their regular rate for hours over 40 in a workweek, and hours cannot be averaged across two weeks (Fact Sheet #23). Being paid a salary does not by itself make a job exempt: the duties and pay must both meet the tests in Fact Sheet #17A. Some states add daily overtime or other rules.

Pre-tax deductions: what comes out before taxes

Pre-tax deductions are subtracted before some or all taxes are figured, so they lower your taxable wages. They do not all lower the same taxes, which is why a stub can show one wage amount for income tax and another for Social Security and Medicare:

• Traditional 401(k) deferrals: lower wages for federal income tax but still count for Social Security and Medicare, as IRS Topic 424 explains.
• Health, dental and vision premiums through a cafeteria plan (Section 125): generally exempt from federal income tax, Social Security and Medicare, according to IRS Publication 15-B.
• Health savings account (HSA) contributions through a cafeteria plan: treated as employer contributions, excluded from income and generally not subject to employment taxes, per Publication 969. The 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage.
• Dependent care assistance through a cafeteria plan: exempt up to $7,500 a year in 2026 ($3,750 if married filing separately).

State treatment can differ. Your benefits enrollment confirms which of your deductions are pre-tax.

What is net pay? Taxes and after-tax deductions

After pre-tax deductions, your employer withholds taxes:

• Federal income tax: figured from your Form W-4 with the methods in IRS Publication 15-T. Bonuses and other supplemental wages can be withheld at a flat 22% under Publication 15, so a bonus check may look more heavily taxed.
• Social Security and Medicare (FICA): 6.2% and 1.45% of FICA wages. See What Is OASDI on My Paycheck? for the 2026 wage base and Additional Medicare Tax.
• State and local taxes: most states withhold income tax, a few do not tax wages, and some cities or counties add their own. Some states also take contributions for disability or paid leave programs.

Then come after-tax deductions, such as Roth 401(k) contributions, union dues, some insurance and garnishments like child support. The net pay meaning, in short: the amount actually paid to you after all of that. If you split direct deposit between accounts, the parts should add up to it.

Gross pay vs net pay: a worked example

A fictional salaried worker earns $62,400 a year, paid every two weeks. Every figure is invented and rounded for clarity:

• Gross pay: $2,400.00
• Health, dental and vision premiums, cafeteria plan: −$80.00
• HSA contribution, cafeteria plan: −$40.00
• Traditional 401(k), 6% of gross: −$144.00
• Social Security: $2,280.00 × 6.2% = −$141.36
• Medicare: $2,280.00 × 1.45% = −$33.06
• Federal income tax, invented for this example: −$165.00
• State income tax, invented for this example: −$72.00
• Supplemental life insurance, after tax: −$12.00
• Net pay: $1,712.58

FICA wages are $2,400.00 − $80.00 − $40.00 = $2,280.00, because the 401(k) deferral does not lower them. Wages for federal income tax are $2,280.00 − $144.00 = $2,136.00. In all, $687.42 comes out, so gross pay vs net pay differs by about 29% here. Your own share will differ with your state, W-4 and benefits.

For an hourly example with overtime, see Paystub Template: What to Include and Free Options.

What does YTD mean on a paycheck?

YTD means year to date: a running total since the start of the year, usually January 1, for each earnings, tax and deduction line. For the worker above, after the 10th paycheck of the year:

• YTD gross pay: 10 × $2,400.00 = $24,000.00
• YTD Social Security: 10 × $141.36 = $1,413.60
• YTD net pay: 10 × $1,712.58 = $17,125.80

Each stub's YTD should equal the last stub's YTD plus this period. On the final stub of the year, the totals should line up with your Form W-2, although Box 1 is usually lower than YTD gross pay when you have pre-tax deductions, because they are left out of it.

From annual salary to paycheck, and why net pay changes

To turn a yearly salary into gross pay per check, divide by the number of pay dates. For a fictional $62,400 salary, the same as $30 an hour for 40 hours a week over 52 weeks:

• Weekly, 52 paychecks: $1,200.00
• Biweekly, 26 paychecks: $2,400.00
• Semimonthly, 24 paychecks: $2,600.00
• Monthly, 12 paychecks: $5,200.00

Net pay can change from one check to the next even when gross pay does not, so the gap between gross pay vs net pay is not fixed. Common reasons:

• Overtime, a bonus or unpaid leave changed gross pay.
• You changed your W-4, your benefits or your retirement contribution.
• Your wages passed the Social Security wage base, so that tax stopped until January, or passed $200,000, adding Additional Medicare Tax.
• A new year brought new withholding tables, benefit costs or state rates.
• A garnishment started or ended.
• With biweekly pay, two months a year usually have three paydays, and some employers take benefit deductions from only two of them.

If your net pay looks wrong

1. Compare the stub with your time records, pay rate and benefit elections.
2. Redo the math in order: gross pay, pre-tax deductions, taxes, after-tax deductions. Social Security should be 6.2% of FICA wages.
3. If federal withholding seems off, run the IRS Tax Withholding Estimator, which asks for your most recent pay stubs, and update your W-4 if needed.
4. Ask payroll or HR in writing, attach the stub and keep copies.
5. If unpaid wages or overtime are not fixed, contact your state labor office or the U.S. Department of Labor's Wage and Hour Division at 1-866-487-9243.

The Wage and Hour Division says complaints are confidential and that employers cannot retaliate against workers for filing one. See how to file a complaint.

Where StubSafe fits

StubSafe is a free pay stub maker from Auto Secure Login for small employers, contractors and others who prepare pay statements from their own payroll records. It needs no account to make a stub and keeps payroll information on your device.

• Gross pay, overtime, each deduction, net pay and year-to-date totals are computed as you type, in whole cents.
• In the full app, each deduction carries a category (tax, pre-tax, post-tax, garnishment or other), and year-to-date figures roll forward from the last statement.
• The full app's optional tax adviser gives estimates to confirm against the official sources it cites. They are not tax advice.

Every document is printed as self-generated and independently unverified. StubSafe does not verify employment or income, and it is not a payroll provider: it does not move money or file taxes.

Frequently asked questions

What is gross pay vs net pay?

Gross pay is your total earnings before deductions; your salary or hourly rate describes it. Net pay is what is left after taxes and deductions, the amount actually deposited. In the example above, $2,400.00 gross became $1,712.58 net.

What is net pay on a paycheck?

Net pay is gross pay minus every tax and deduction: your take-home amount. If you split direct deposits, the parts should add up to the net pay on your stub.

Do pre-tax deductions lower all taxes?

No. Cafeteria-plan health premiums generally lower wages for federal income tax, Social Security and Medicare. Traditional 401(k) deferrals lower only income tax wages; they still count for Social Security and Medicare. State treatment can differ.

What does YTD mean on a paycheck?

Year to date: running totals since the start of the year for earnings, each tax and each deduction. Each stub's YTD should equal the previous stub's YTD plus this period.

Why did my net pay go down in January?

Common reasons are new benefit costs, a new W-4 or new withholding tables, and Social Security withholding starting again if your wages passed the wage base the year before.

Is there a free tool that shows gross and net pay on a stub?

StubSafe is free and needs no account to make a stub. It works out gross pay, each deduction and net pay from the figures you enter, but it does not confirm those figures or run payroll.

Related guides

• What Is OASDI on My Paycheck? OASDI and FICA Explained
• What Is a Pay Stub? Every Line Explained
• Paystub Template: What to Include and Free Options

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