Gross Pay vs Net Pay: The Difference, With Examples

Gross pay is the amount earned before deductions. Net pay is the amount left after deductions are subtracted, and it is usually the figure deposited or paid by check. On a pay stub, the deductions between the two numbers explain the difference between what someone earned and what they actually received.

If you are reviewing a stub or preparing one, understanding this difference helps you check the numbers before relying on them. This guide covers what feeds each figure, the salary math for every pay frequency, two worked examples, and the situations where net pay and the bank deposit legitimately differ.

What gross pay means

Gross pay is the starting amount. For hourly workers, it is usually hours multiplied by rate, plus overtime or other earnings. For salary workers, it is the salary amount assigned to that pay period.

Gross pay may include:

• Regular wages
• Overtime
• Salary pay
• Commission
• Bonus
• Tips reported through payroll
• Other earning lines, such as holiday or shift differential pay

Gross pay does not mean take-home pay. It is the amount before deductions.

It also leaves out one thing that often appears on the same stub. An expense reimbursement paid under an accountable plan repays a cost the employee covered, so it is added after deductions rather than counted in gross; the reasoning is in reimbursements vs earnings.

Salary gross pay by pay frequency

For a salaried employee, gross pay per check is the annual salary divided by the number of pay dates in the year. The same salary produces four different gross figures depending on the schedule.

Biweekly schedules occasionally have 27 pay dates in a year. January 1, 2027 falls on a Friday, so a Friday biweekly schedule that starts that day reaches its 27th payday on December 31, 2027. Employers handle the extra check in different ways: keeping $2,400.00 per check raises annual pay to $64,800.00, while dividing $62,400 by 27 gives about $2,311.11 per check. The schedule differences behind this are covered in biweekly and semimonthly schedules.

What net pay means

Net pay is the amount after deductions. It is often the number paid by check, direct deposit, or another payment method.

The basic idea is:

Gross pay minus deductions equals net pay.

There may be special adjustments depending on the record. The two most common are reimbursements, which are added back after deductions, and reported cash tips, which some stubs add to gross for tax purposes and then subtract because the employee already has the cash. If net pay looks wrong, review the deduction lines and gross earnings first, then look for one of those adjustments.

What sits between the two numbers

Deductions reduce gross pay. They usually include taxes, benefits, retirement contributions, or other items depending on the situation:

• Taxes: federal income tax withholding, state and local income tax, and FICA, which for 2026 is 6.2% Social Security on wages up to $184,500 and 1.45% Medicare, according to IRS Publication 15.
• Pre-tax benefits: items such as cafeteria-plan health premiums and traditional 401(k) deferrals, which lower one or more taxable wage figures before taxes are calculated.
• After-tax items: Roth 401(k) deferrals, union dues, charitable pledges and similar elections.
• Orders: garnishments and child support, figured from disposable earnings.

Because deductions can be payroll and tax related, do not guess. The full list of paystub deductions explains each family and its codes.

A weekly hourly stub from gross to net

Illustrative example (made-up figures): an hourly employee works 38 hours in a week at $19.50 and pays an $8.00 dental premium through a cafeteria plan. Federal and state income tax amounts are assumptions rather than table results.

Social Security and Medicare are figured on $741.00 − $8.00 = $733.00, because the dental premium is pre-tax. Net pay works out to about 81.5% of gross here, since $603.92 ÷ $741.00 = 0.815. That share is specific to this made-up stub; a different state, W-4 or benefit election would change it.

When net pay is not simply gross minus deductions

Illustrative example (made-up figures): a salaried employee paid semimonthly earns $2,600.00 gross, has assumed total deductions of $598.40, and receives a $45.00 reimbursement for a work purchase. They split their deposit, sending $300.00 to savings.

• Gross pay minus deductions: $2,600.00 − $598.40 = $2,001.60
• Add the reimbursement: $2,001.60 + $45.00 = $2,046.60, the net pay printed on the stub
• Amount sent to savings: $300.00
• Amount that reaches checking: $2,046.60 − $300.00 = $1,746.60

Anyone comparing the checking account deposit with the stub would see $1,746.60 against $2,046.60 and assume an error. The stub is right; the deposit was divided. A stub with a split deposit normally lists each account's share near the net pay figure.

Why gross and net pay get confused

People often confuse gross and net pay because net pay is the amount they actually see in a bank account. But the pay stub needs both numbers.

Gross pay explains the earning amount. Net pay explains the final amount after deductions. Without both, the pay record is incomplete.

The confusion also runs the other way. Offer letters, job postings and annual salary figures are all stated as gross, so someone budgeting from a $62,400 salary may expect $2,400.00 in every biweekly deposit. The first stub usually shows a noticeably smaller net amount, and the deduction lines explain why.

How to review gross and net pay

Before relying on or downloading a pay stub, check that the numbers make sense together.

Ask:

• Does gross pay match the hours, rate, salary, or payment record?
• Does gross pay equal the sum of every earning line?
• Are deduction lines supported by your records?
• Does net pay match gross pay minus deductions, plus any reimbursement?
• Do YTD totals make sense compared with previous pay records?

If the answer is no, fix the numbers before final download. When the stub came from an employer, take the specific line and pay date to payroll.

What about year-to-date totals?

Year-to-date totals may show cumulative gross pay, deductions, and net pay for the year. These totals are helpful but should be based on prior records. A biweekly employee paid $2,400.00 per check should show YTD gross of $12,000.00 on their fifth stub of the year, since 5 × $2,400.00 = $12,000.00.

The same subtraction works on the YTD columns: YTD gross minus YTD deductions, plus YTD reimbursements, should equal YTD net. For a refresher on how those running totals build, review year-to-date totals on a paystub.

Do not use the current pay period as the YTD amount unless that is actually correct for the year, as it is on the first stub of the year.

Gross, taxable and net: the third number on some stubs

Many stubs print a figure between gross and net: taxable wages. It is gross pay minus the deductions that a particular tax excludes, so federal taxable wages, Social Security wages and Medicare wages can all differ. W-2 Box 1 reports federal taxable wages for the year, not gross pay, which is why the two rarely match. How each deduction affects those figures is explained in how pre-tax deductions work.

Why the same gross pay nets differently by location

Two employees with identical gross pay and identical benefits can take home different amounts. State income tax ranges from none in some states to a significant line in others, and some cities, counties and school districts add a local wage tax. A few states also collect employee disability or paid leave premiums. These rates are set by state revenue and labor agencies and by local governments, which publish them each year, so the employer's payroll provider or the state agency is the place to confirm which apply.

Gross and net on a paystub you prepare

For a paystub-style record, the reading that matters most is the one that happens before download. Read the stub the way it is laid out, which the guide to reading every section of a stub walks through, and confirm that the deductions explain the gap between the two headline numbers.

In PayStubGo's paystub generator, gross pay comes from regular hours and rate or a salary amount, plus overtime, bonus and commission. Net pay is gross pay minus the tax and custom deduction lines, plus any amount in the Reimbursement field, and the preview shows both before you download. The first stub each year is free through the free paystub generator.

PayStubGo formats the figures you supply and does not replace payroll software or tax advice. When gross or net pay on an employer's stub looks wrong, the employer's payroll department is the source that can correct it.

Related: How to Read a Pay Stub, Line by Line

Related: Can You File Taxes With Your Last Pay Stub? Form 4852 Explained