Definitions
Gross pay is everything you earned in a pay period before any deductions: salary or hourly wages, overtime, bonuses, commissions and reported tips. Job offers, pay rates and salary figures are all quoted as gross.
Net pay, also called take-home pay, is what’s deposited in your account. It’s gross pay minus:
- Pre-tax deductions: traditional 401(k), §125 health, dental and vision premiums, HSA and FSA contributions, commuter benefits.
- Taxes: federal income tax, Social Security, Medicare, and state and local tax where they apply.
- After-tax deductions: Roth 401(k), union dues, garnishments, some insurance.
The formula
Net pay = Gross pay − Pre-tax deductions − Taxes − After-tax deductions
The catch is that each tax uses its own wage base:
- Federal income tax is figured on gross minus most pre-tax deductions.
- Social Security and Medicare are figured on gross minus §125 and similar deductions, but not minus 401(k) deferrals.
- State income tax follows each state’s rules, which mostly match federal, with exceptions. New Jersey, for example, taxes §125 salary reductions, and Pennsylvania taxes 401(k) deferrals.
Gross pay for salaried vs hourly workers
Salary
Gross pay per check = annual salary ÷ number of paychecks.
| Pay frequency | Paychecks a year | Gross per check on $72,000 |
|---|---|---|
| Weekly | 52 | $1,384.62 |
| Biweekly | 26 | $2,769.23 |
| Semi-monthly | 24 | $3,000.00 |
| Monthly | 12 | $6,000.00 |
Hourly
Gross pay per check = (regular hours × rate) + (overtime hours × rate × 1.5).
At $25 an hour with 80 regular hours and 6 overtime hours in a biweekly period:
- Regular pay: 80 × $25 = $2,000.00
- Overtime pay: 6 × $37.50 = $225.00
- Gross pay: $2,225.00
The overtime calculator and the salary to hourly calculator handle the conversions.
Monthly example: $72,000 salary in Texas
A single employee earns $72,000 a year, paid monthly, in Texas, with a 2026 W-4 that has no adjustments. Texas has no state income tax. The numbers come from our calculator’s engine.
Without deductions
| Monthly | |
|---|---|
| Gross pay | $6,000.00 |
| Federal income tax | −$584.17 |
| Social Security (6.2%) | −$372.00 |
| Medicare (1.45%) | −$87.00 |
| Net pay | $4,956.83 |
Net is 82.6% of gross.
With a 5% 401(k) and $200 health premiums
| Monthly | |
|---|---|
| Gross pay | $6,000.00 |
| 401(k), 5% (pre-tax) | −$300.00 |
| Health insurance, §125 (pre-tax) | −$200.00 |
| Federal income tax | −$478.33 |
| Social Security | −$359.60 |
| Medicare | −$84.10 |
| Net pay | $4,577.97 |
How each tax was figured:
- Federal taxable wages: $5,500 ($6,000 − $300 − $200).
- Social Security and Medicare wages: $5,800 ($6,000 − $200; the 401(k) doesn’t reduce them).
- Federal income tax fell by $105.84 a month. Without the deductions, this salary reaches the 22% bracket. With them, taxable income stays inside the 12% bracket.
So $500 a month goes to retirement and health coverage, but take-home pay drops by only $378.86. Try your own numbers in the 401(k) paycheck calculator.
Where to find gross and net on your pay stub and W-2
On a pay stub, gross pay is usually the first total, labeled Gross, Total earnings or Current earnings. Net pay is the last line, often labeled Net pay or Net check, and it should match your direct deposit. Many stubs also print the taxable wages for each tax, which sit between the two: lower than gross, higher than net.
Your W-2 never shows net pay, and it doesn’t show gross pay as one number either:
- Box 1 (federal wages) is gross minus pre-tax deductions such as a traditional 401(k) and §125 premiums.
- Boxes 3 and 5 (Social Security and Medicare wages) are gross minus §125-type deductions, but they still include 401(k) deferrals. Box 3 stops at $184,500.
- Box 16 (state wages) follows your state’s rules.
That’s why box 1 is often the smallest wage figure on a W-2 for someone with a 401(k), and why it rarely matches the salary in your offer letter.
Gross vs net when comparing job offers
Two offers with the same gross salary can produce different net pay. The state matters most: the same $72,000 nets $4,956.83 a month in Texas before deductions, while a state with income tax or a disability or family leave program takes more. Benefits matter too. An employer that pays more of the health premium leaves you with a larger net check at the same gross. Compare offers by running both through the calculator with each employer’s real deductions.
Working backward from net to gross
If you need a specific net amount, for example a $2,000 bonus that should land as $2,000, you have to “gross up” the payment so it covers the taxes. The gross-up calculator does this for federal, FICA and state tax.
Why net pay changes from check to check
Net pay can move even when gross pay doesn’t:
- Social Security stops after $184,500 of wages with one employer and restarts in January.
- Additional Medicare tax of 0.9% starts after $200,000.
- Benefit and contribution changes at open enrollment, or a new 401(k) percentage.
- Bonuses withheld at a flat 22% federal rate.
Our guide to why a paycheck can be lower than expected covers each one. For your exact net pay in any state, use the paycheck calculator.