Gross pay vs net pay: what comes out of your paycheck

Gross pay is the amount you earn before payroll deductions. Net payis what is left after federal tax, state tax, FICA, retirement contributions, insurance premiums, and any other paycheck deductions come out.

Why your bank deposit is smaller

The biggest gap usually comes from three buckets: federal income tax, FICA (Social Security and Medicare), and optional deductions such as 401(k) contributions or health insurance. If you live in a state with income tax, that adds another layer. Some cities add local payroll taxes on top.

Gross pay is still useful

Offer letters, salary discussions, and hourly rates are usually quoted as gross pay. That number matters because it is the starting point for annual income, overtime rates, and benefit percentages. It just is not the same as spendable cash.

Use the right tool

If you want the deposit estimate, use the paycheck calculator. If you want to understand how hours turn into gross pay before tax, start with the time card calculator or overtime calculator.