Gross pay: what you earn
Gross pay is the top-line number — the total dollars you earn in a pay period before anything comes out. For salaried workers it is annual salary divided by number of pay periods (52 for weekly, 26 for bi-weekly, 24 for semi-monthly, 12 for monthly). For hourly workers it is hours × rate + overtime × overtime rate + any bonus, commission, or tips.
When a job listing says "$60,000 per year", that is gross annual pay. Your paycheck will never be $60,000 ÷ 26 = $2,307.69 per pay period, because taxes and deductions have not been taken out yet.
Net pay: what you take home
Net pay is what shows up in your bank account after every deduction. On a US pay stub, the deductions between gross and net typically include:
• Federal income tax (variable — depends on W-4 elections, filing status, and income; usually 10–24%)
• Social Security tax — flat 6.2% of the first $176,100 (2025 wage base)
• Medicare tax — flat 1.45%, plus an additional 0.9% on wages over $200,000
• State income tax — 0% in nine states, up to 13.3% (California top bracket)
• Local tax — a handful of cities (NYC, Philadelphia, Detroit) and Pennsylvania municipalities
• Pre-tax benefits — health insurance premiums, 401(k) traditional contribution, HSA, FSA, transit
• Post-tax benefits — Roth 401(k), life insurance premiums above $50,000, union dues, garnishments
A worked example
Take a $60,000 salary, bi-weekly pay, single filer in Texas (no state tax), contributing 5% to a traditional 401(k) and $200 per period for health insurance.
Gross per pay period: $60,000 ÷ 26 = $2,307.69. Subtract $200 health premium (pre-tax) and $115.38 401(k) (5% of gross), taxable wages = $1,992.31. Federal tax on that (2025 tables, standard single deduction) ≈ $166. Social Security = $2,307.69 × 6.2% = $143.08. Medicare = $2,307.69 × 1.45% = $33.46. No state or local tax.
Net pay ≈ $1,992.31 − $166 − $143.08 − $33.46 = $1,649.77. That is 71.5% of gross. In California with the same numbers, expect ~$1,540 (66.7% of gross). In a NYC + New York State combo, ~$1,470 (63.7% of gross).