Gross Pay vs Net Pay: How to Read Your Pay Stub

Gross pay vs net pay comes down to one thing: gross pay is what you earn before anything comes out, and net pay is what is left after taxes and deductions. Net pay is the amount that actually lands in your bank account, and take-home pay is another name for it.

On a $60,000 salary paid every two weeks, gross pay is $2,307.69 a check. A single filer in Texas with no deductions nets $1,938.08. Add a 401(k), health insurance and a state income tax, and the gap grows. The paycheck calculator shows both numbers for any state, and this guide walks through each line between them.

Gross pay

Gross pay is your total earnings for the pay period:

• For a salary, the yearly amount divided by the number of paychecks: $60,000 / 26 = $2,307.69.
• For hourly pay, your rate times your hours, plus overtime at 1.5 times your rate.
• Plus tips you reported, commissions, bonuses, shift differentials and paid time off.

Your offer letter and most job listings quote gross pay. So do loan and rental applications. The FAQ on what gross pay is has a short definition.

Net pay

Net pay is gross pay minus everything withheld. That includes taxes you can’t avoid, like Social Security and Medicare, and deductions you chose, like a 401(k) or health plan.

Net pay = Gross pay - pre-tax deductions - taxes - after-tax deductions

Net pay is the number to budget with. If you want to work it out by hand, the guide on how to calculate take-home pay goes step by step.

A sample pay stub, line by line

Here is what one paycheck looks like for a single filer in California earning $60,000, paid every two weeks, with a 6% traditional 401(k) and $100 of health premiums a check:

Pay stub line	This period
Gross pay	$2,307.69
401(k)	-$138.46
Medical	-$100.00
Federal income tax	-$164.46
Social Security (OASDI)	-$136.88
Medicare	-$32.01
CA state income tax	-$53.63
CA SDI	-$28.70
Net pay	$1,653.55

Out of $2,307.69 earned, $1,653.55 reaches the bank. Taxes took $415.68, and $238.46 went to the worker’s own retirement and health coverage.

Header

The top of the stub shows your name, employer, pay period start and end dates, and pay date. Check the dates first when comparing two stubs, since a short or long period changes everything below it.

Earnings

Each type of pay gets its own row: regular, overtime, holiday, PTO, tips, bonus. Each row shows hours, rate, the amount for this period and the year-to-date (YTD) total. The current amounts add up to gross pay.

Pre-tax deductions

These come out before some or all taxes are figured, so they lower your tax:

• A traditional 401(k) lowers federal and most state income tax, but not Social Security or Medicare.
• Medical, dental and vision premiums under a cafeteria plan lower all of them.
• HSA and FSA contributions through payroll work the same way. California and New Jersey tax HSA contributions at the state level.

Some stubs print the taxable wages for each tax. In this example, federal taxable wages are $2,069.23 and Social Security and Medicare wages are $2,207.69. The pre-tax deduction entry explains why they differ. The FAQ on whether a 401(k) reduces taxable income has more.

Taxes

Common label	What it is
FED, FIT, FITW, Federal W/H	Federal income tax withholding, set by your W-4
OASDI, SS, FICA-OASDI	Social Security, 6.2% up to $184,500 in 2026
MED, FICA-HI	Medicare, 1.45%, plus 0.9% over $200,000
SIT, ST W/H	State income tax
SDI, PFL, FLI	State disability or paid family leave programs
LIT, CITY, LOCAL, EIT	Local income tax

Federal income tax is the only one your W-4 controls. Social Security and Medicare are flat. The FICA guide covers both, and the FAQ on whether state tax is taken out of your paycheck covers the state lines.

After-tax deductions

Roth 401(k) contributions, union dues, some life and disability insurance, charitable gifts and wage garnishments come out after tax. They lower net pay dollar for dollar and change no tax.

Employer contributions

Some stubs list what your employer paid for you, such as a 401(k) match, its share of health premiums, or its matching Social Security and Medicare. These are shown for your information. They don’t come out of your pay and aren’t part of gross or net pay.

Net pay and deposit

The bottom line is net pay, often split by account if you send part to savings. That is the amount you should see in your bank.

Year-to-date totals

YTD columns add up every check so far this calendar year. They tell you how close you are to the Social Security wage base or the 401(k) limit of $24,500, and your last stub of the year should match your W-2.

Gross pay vs the numbers on your W-2

Your W-2 doesn’t show gross pay. Box 1 shows federal taxable wages, which is gross pay minus pre-tax deductions like a 401(k) and health premiums. For a full year of the example above, gross pay is $60,000, Box 1 is $53,800, and the Social Security and Medicare wage boxes are $57,400. The 401(k) stays in the Social Security and Medicare wages. The health premiums come out of all three.

If your W-2 looks low next to your salary, that’s usually why.

When net pay looks wrong

Compare the stub to the last one, line by line. A drop in gross pay points to hours or pay. A drop in net pay with the same gross points to a deduction or tax. The guide on why your paycheck went down has a full checklist, and the guide on what percentage of your paycheck goes to taxes shows what is normal at your salary.