Gross pay vs net pay (2026)

What is the difference between gross pay and net pay? Gross pay is your pay before any deductions. Net pay, or take-home pay, is what you receive after taxes and deductions are subtracted. On a $60,000 salary, a single filer with no state income tax takes home about 84.0% as net pay, and less in states that tax income.

Gross pay vs net pay

Gross pay is the total you earn for a pay period before anything is taken out. Net pay is what is left after taxes and deductions, and it is the amount that lands in your bank account. When an employer offers “$60,000 a year”, that is a gross figure; what you can spend each month is the net figure.

The two numbers often surprise people who budget from an offer letter. Federal income tax, Social Security and Medicare apply in every state, and most states add an income tax of their own, so net pay is always lower than gross.

The formula

Net pay is gross pay minus everything withheld, in this order:

Gross pay — salary divided by pay periods, or hourly rate times hours plus overtime.
Pre-tax deductions — traditional 401(k), health premiums, HSA. These reduce the wages that income tax is calculated on. See pre-tax deductions.
Taxes — federal income tax, 6.2% Social Security (up to $184,500 in 2026), 1.45% Medicare, then state and local tax and any state programs such as disability insurance.
Post-tax deductions — Roth 401(k), garnishments, union dues.

The result is net pay. Every line has a label on your pay stub; decode them in pay stub abbreviations explained or try the pay stub decoder.

Where a $60,000 salary goes

A single filer paid $60,000, with no pre-tax deductions, 2026 rules, in a state with no income tax (Texas):

Take-home $50,390 (84.0%)
Federal income tax $5,020 (8.4%)
Social Security $3,720 (6.2%)
Medicare $870 (1.5%)

Where a $60,000 salary goes in Texas: take-home vs taxes

Gross pay of $60,000 becomes net pay of $50,390 a year, or $1,938 every two weeks. The $9,610 gap is 16.0% of gross pay.

Why net pay differs by state

The same $60,000 gross produces a different net pay depending on where you work, because only the state layer changes:

$60,000 gross, single filer	Texas	California	New York
Federal income tax	$5,020	$5,020	$5,020
Social Security + Medicare	$4,590	$4,590	$4,590
State income tax	$0	$1,640	$2,643
State disability / paid leave	$0	$780	$290
Net pay / year	$50,390	$47,970	$47,457

See every state ranked in the 2026 take-home pay study, or open your state's paycheck calculator.

How big is the gap?

The gap grows with income because federal brackets are progressive. With no state income tax and no deductions:

Gross / year	Net / year	Taken out	Share of gross
$30,000	$26,285	$3,715	12.4%
$60,000	$50,390	$9,610	16.0%
$100,000	$79,180	$20,820	20.8%
$150,000	$113,791	$36,209	24.1%

The full range by income is in how much tax is taken out of a paycheck.

Gross or net when you negotiate

Salaries are negotiated and quoted gross. But the number that decides whether an offer works for you is net pay in your state. Two practical habits help:

Start from the take-home you need, then use the reverse paycheck calculator to find the gross salary that delivers it.
Compare offers in different states by net pay, not gross. A higher gross in a high-tax state can leave you with less. See Texas vs California as an example.

Remember that retirement and health deductions lower net pay but also lower tax, so a bigger 401(k) contribution costs less in take-home than it looks.

Check your own paycheck

Find gross pay and net pay at the top and bottom of your stub.
Multiply gross (after pre-tax benefits) by 7.65% and compare it with your FICA lines.
Run your salary, state and W-4 choices through the paycheck calculator and compare net pay.
If it is off by more than a few dollars, check deductions, bonus or overtime in that period, and ask payroll.

This is general information, not tax advice.

Frequently asked questions

What is the difference between gross pay and net pay?

Gross pay is what you earn before anything is taken out. Net pay, also called take-home pay, is what is left after taxes and deductions and is what reaches your bank account.

Is salary quoted as gross or net?

Almost always gross. An offer of $60,000 means $60,000 before taxes and deductions, so your take-home pay will be lower.

How do I calculate net pay from gross pay?

Subtract pre-tax deductions, then federal income tax, Social Security, Medicare and any state and local tax, then subtract post-tax deductions. The paycheck calculator does the full calculation for your state.

Can I work backward from net pay to gross pay?

Yes, but not with a single multiplier, because federal tax rises in brackets and Social Security stops at a wage base. The reverse paycheck calculator solves it for you.

Why is my net pay different every paycheck?

Overtime, bonuses, changes to benefits, unpaid time off and the Social Security wage base can all change the amount, even when your salary has not changed.