Gross vs. Net Pay: What Comes Out of a Paycheck
Gross pay is what you earn. Net pay is what you receive. The gap is made of taxes and deductions, and knowing its parts makes any salary figure easier to read.
Gross pay
Gross pay is your wage or salary before anything is taken out: hours × rate for hourly workers, or the salary divided by the number of pay periods. Job offers, salary surveys and every calculator on this site use gross figures.
Net pay
Net pay, or take-home pay, is the amount deposited after all withholdings. On a typical U.S. paycheck it is noticeably lower than gross pay, and the gap grows with income.
What gets taken out
Social Security and Medicare (FICA)
Employees pay 6.2% of wages for Social Security and 1.45% for Medicare, 7.65% in total. Employers pay a matching 7.65%. Social Security applies only up to a yearly wage cap that is adjusted each year; wages above the cap are not taxed for Social Security. Medicare has no cap, and an additional 0.9% Medicare tax applies to wages above $200,000 for a single filer.
Because FICA is a flat percentage for most workers, it is the one deduction you can estimate exactly: multiply gross pay by 0.9235 to see pay after FICA. On $4,000 a month, that is $3,694.
Federal income tax
Federal income tax is withheld based on the W-4 form you give your employer. The amount depends on your filing status, other income, dependents and deductions. The U.S. system is progressive: each bracket's rate applies only to the income inside that bracket, so moving into a higher bracket never reduces take-home pay overall.
State and local income tax
Most states tax wages, at flat or progressive rates. A handful have no state income tax on wages, including Texas, Florida, Washington, Nevada, Tennessee, South Dakota, Wyoming and Alaska. Some cities and counties add their own tax.
Pre-tax deductions
Contributions to a traditional 401(k) or 403(b), health, dental and vision premiums under a cafeteria plan, and health savings account (HSA) contributions are usually taken out before income tax is calculated. They lower your take-home pay, but by less than their full amount, because they also lower your taxable income.
Post-tax deductions
Roth retirement contributions, some insurance, union dues and wage garnishments come out after taxes.
Reading your pay stub
A pay stub lists gross pay for the period, each deduction, net pay, and year-to-date totals for each line. Check the year-to-date gross against your expected salary, and look for any deduction you do not recognize. Errors happen, and the stub is the place to catch them.
Why calculators here show gross pay
Net pay depends on too many personal factors to state on a general page: state, filing status, benefits elections and retirement choices. Gross pay is the number you can compare across offers and the one employers quote. For a personal take-home estimate, the IRS Tax Withholding Estimator on irs.gov uses your actual details.
Budgeting from gross or net
Rules of thumb like 50/30/20 and "rent at 30% of income" are often quoted on gross income because it is easy to know. Budgeting from net pay is more accurate, because it is the money you can spend. If you use a gross-based rule, treat the result as an upper limit.
Use the pay converter for gross figures by period, and see biweekly vs. semimonthly pay for how often the net amount arrives.
Last reviewed October 2, 2026. General information, not financial, tax or legal advice.