Gross Pay vs. Net Pay Explained
Your gross pay is what your employer pays you. Your net pay is what you actually take home. The difference? Taxes and deductions — and it's usually bigger than people expect.
The simple breakdown
| Gross Pay | Net Pay | |
|---|---|---|
| What it is | Total earnings before anything is taken out | What actually hits your bank account |
| Also called | Pre-tax pay, total compensation | Take-home pay, after-tax pay |
| On your paystub | Top line / "Gross" | Bottom line / "Net Pay" |
What comes out between gross and net?
For a California worker earning $60/hr (40hrs/wk, single):
| Deduction | Per Paycheck | Annual | % of Gross |
|---|---|---|---|
| Federal Income Tax | -$466 | -$12,106 | 9.7% |
| California State Tax | -$164 | -$4,270 | 3.4% |
| Social Security (6.2%) | -$297 | -$7,738 | 6.2% |
| Medicare (1.45%) | -$70 | -$1,810 | 1.45% |
| Health Insurance | -$185 | -$4,810 | 3.9% |
| 401(k) (5%) | -$240 | -$6,240 | 5.0% |
| Total Deductions | -$1,422 | -$36,974 | 29.7% |
| Net Take-Home | $3,378 | $87,826 | 70.3% |
Key insight: At $60/hr in California, you keep about 70 cents of every dollar earned. The exact percentage depends on your filing status, state, and deductions.
How filing status affects net pay
Same $60/hr worker, different filing statuses:
| Filing Status | Annual Net | Biweekly Net | Keep Rate |
|---|---|---|---|
| Single | $87,826 | $3,378 | 70.3% |
| Married filing jointly | $93,440 | $3,594 | 74.8% |
| Head of household | $90,644 | $3,486 | 72.6% |
Why your net pay matters more
When comparing job offers or negotiating pay, always think in terms of net pay:
- A $70/hr job in California ≠ a $70/hr job in Texas (CA has 9.3%+ state tax, TX has 0%)
- A job with expensive health insurance ($500/check) takes home less than one with $150/check insurance
- Union dues (typically 2% of gross) reduce take-home but often come with better base rates and protections
See the full $60/hr breakdown →
See what real workers take home
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