Gross vs Net Pay Explained

Gross pay is your total earnings before any deductions. Net pay — your take-home pay — is what remains after taxes and other deductions.

The main deductions

The main deductions are federal income tax withholding, FICA (Social Security and Medicare), and any pre-tax benefits like 401(k) contributions or health premiums.

Why it matters

Understanding the gap helps you budget realistically and see how pre-tax contributions lower your taxable income.

This guide is educational and does not constitute financial advice.