Gross Pay vs Net Pay: What Is the Difference?

Understand gross and net pay, what comes out of your paycheck, and why the two numbers differ.

Gross pay is the total you earn before anything is taken out. Net pay, often called take-home pay, is what you actually receive after taxes and deductions. A job offer at $60,000 a year describes gross pay, which is why your deposits are smaller than you might expect.

What comes out of gross pay

Deductions fall into two groups. Mandatory ones include federal income tax, Social Security (6.2%), Medicare (1.45%), and state or local income tax where they apply. Voluntary ones include retirement contributions, health insurance premiums, HSA or FSA deposits, and union dues.

A worked example

Say you earn $60,000 as a single filer in a state with no income tax. After the 2026 standard deduction of $16,100, about $43,900 is taxable for federal purposes, which comes to roughly $5,100 in federal tax. Social Security takes $3,720 and Medicare $870. Your take-home pay is about $50,400 a year, or roughly $1,935 per biweekly paycheck. Try your own numbers in the paycheck calculator.

Why does this matter?

Budgets, rent, and loans are paid from net pay, not gross pay. When comparing job offers, compare estimated take-home pay, not just the headline salary, because state taxes and benefits costs can change the result significantly.

Pre-tax vs post-tax deductions

Pre-tax deductions, such as traditional 401(k) contributions, lower your taxable income, so they reduce your income tax while saving for the future. Post-tax deductions, such as Roth 401(k) contributions, do not lower your current tax.

Updated October 2026. For information only, not tax advice.