Gross Pay vs. Net Pay: What's the Difference?
Your offer letter shows gross pay, but your bank account shows net pay. Here's exactly what happens in between.
What is gross pay?
Gross pay is your total earnings before any taxes or deductions are removed. For a salaried worker, it's the annual salary on your offer letter divided by your number of pay periods. For an hourly worker, it's your hourly wage times the hours you worked, including any overtime.
What is net pay?
Net pay — also called take-home pay — is the amount that actually lands in your bank account after everything is subtracted. This is the number that matters for your budget, and it's usually 20–35% lower than gross pay for U.S. workers.
What gets subtracted from gross to get net
Several items stand between gross and net: federal income tax (based on the 2026 brackets and your W-4), Social Security (6.2%), Medicare (1.45%), state and local income tax, and voluntary deductions like a traditional 401(k), health insurance premiums, and other benefits. Pre-tax deductions are subtracted before tax is calculated, which lowers your taxable income.
A quick example
Imagine a $60,000 salary. That's your gross. After roughly $5,000 in federal income tax, $3,720 in Social Security, $870 in Medicare, and state tax, your net might be around $46,000–$49,000 depending on your state — before any 401(k) or health premiums. The exact figure depends on your filing status, state, and deductions.
How to find your net pay
Rather than estimate, plug your numbers into our paycheck calculator. It applies 2026 federal, FICA, and state rules to show your net pay per paycheck and per year, along with a breakdown of every deduction.