Gross Pay vs. Net Pay

Two very different numbers show up on every paycheck — here's where the gap between them actually goes.

Every paycheck carries two very different numbers, and mixing them up is one of the most common ways people misjudge a job offer or a raise. Your gross pay is what you earned before anything is taken out — the number tied to your hourly rate or salary. Your net pay is what actually lands in your bank account after taxes and other deductions come out. The gap between the two is rarely small, and almost none of it is optional.

The single biggest, and most predictable, piece of that gap is FICA: Social Security and Medicare tax, withheld at a combined 7.65% of gross pay for most employees (6.2% for Social Security, 1.45% for Medicare), per the Social Security Administration. The Social Security portion only applies up to an annual wage cap — $184,500 for 2026 — above which that 6.2% stops; the 1.45% Medicare share applies to every dollar you earn, with an extra 0.9% kicking in on income above $200,000 ($250,000 for married couples filing jointly).

On top of FICA, your employer withholds federal income tax based on the Form W-4 you filled out when you were hired — your filing status, dependents, and any additional withholding you requested. The IRS describes this as a “pay-as-you-go” system: withholding is an estimate of what you'll owe for the year, not the actual bill. Withhold too little and you can owe money, plus a possible penalty, at tax time; withhold too much and you get a refund, but you gave the government an interest-free loan on your own money in the meantime.

State income tax withholding works the same way in the roughly forty states that have one — a handful, including Texas, Florida, and Washington, have no state income tax at all, which is one reason two people with an identical gross salary in different states can see meaningfully different net pay. Pre-tax deductions complicate the picture further: money that goes into a traditional 401(k) or comes out for health insurance premiums is typically subtracted from pay before income tax is calculated, which lowers taxable income, and therefore withholding, without changing the gross pay figure on paper.

As a rough example: someone earning $60,000 a year, paid biweekly, has a gross paycheck of $2,307.69. FICA alone takes about $176.54 of that (7.65%) before any income tax withholding is applied. The exact net figure after federal, state, and any pre-tax deductions varies by person — which is exactly why two employees on the same salary can take home different amounts.

The most common mistake is comparing two job offers, or a raise, using gross figures alone. A $5,000 raise doesn't mean $5,000 more in your pocket — expect roughly 7.65% of it gone to FICA before any income tax withholding even applies, more if it pushes you into a higher tax bracket. This site's pay calculators, like the Hourly to Salary Calculator and Hours Worked Calculator, show gross figures only — on purpose, since actual net pay depends on withholding elections and state rules a general calculator can't know.