The difference in one line
The Consumer Financial Protection Bureau's guide to pay stubs uses the same idea. Gross wages are "how much you made before deductions were taken out." Net pay is "gross pay minus all the deductions. This is your 'take-home' pay."
What is net pay?
Net pay is the amount your employer actually deposits or pays you. It's the bottom line of your pay stub. When you budget, net pay is the number to use, because it's the money you can spend. The budget calculator starts from it.
What comes out between gross and net
- Federal income tax, withheld based on your W-4.
- Social Security tax: 6.2% of wages, up to $184,500 of wages in 2026.
- Medicare tax: 1.45% of all wages, plus 0.9% Additional Medicare Tax that employers withhold on wages over $200,000.
- State and local income tax, where your state or city has one.
- Pre-tax deductions, like traditional 401(k) contributions and health insurance premiums. The CFPB notes these are "subtracted before your tax withholdings are calculated," which lowers the tax taken out.
- After-tax deductions, like Roth 401(k) contributions, union dues or wage garnishments.
Examples at 2026 federal rates
These are rough yearly figures for a single filer using the 2026 brackets and $16,100 standard deduction, plus Social Security and Medicare, with no state tax and no pre-tax deductions:
| Gross pay | Federal income tax | Social Security + Medicare | Net pay | Net a month |
|---|---|---|---|---|
| $40,000 | $2,620 | $3,060 | $34,320 | $2,860 |
| $60,000 | $5,020 | $4,590 | $50,390 | $4,199 |
| $80,000 | $8,770 | $6,120 | $65,110 | $5,426 |
| $100,000 | $13,170 | $7,650 | $79,180 | $6,598 |
So someone earning $60,000 gross takes home roughly $50,390, about 84% of gross. In a state with an income tax, or with 401(k) and health deductions, net pay is lower. Get your own number with the take-home pay calculator or the paycheck calculator.
Net income has a second meaning
"Net income" doesn't only mean take-home pay. For a business, net income is revenue minus all expenses: the profit. For self-employed people, net earnings from self-employment are business income minus business expenses, and that's what self-employment tax is figured on. When a form or lender asks for net income, check which one they mean.
Which number to use
| Situation | Use |
|---|---|
| Comparing job offers | Gross (salaries are quoted gross), but check benefits |
| Monthly budget | Net |
| Mortgage or loan application | Usually gross monthly income |
| Saving goals | Net, after your fixed bills |
A quick way to estimate net from gross
The table above gives a rule of thumb: from $40,000 to $100,000, a single filer with no state income tax and no pre-tax deductions keeps roughly 79% to 86% of gross pay in 2026. Lower incomes keep a larger share and higher incomes a smaller one, because of the bracket system. State tax and deductions bring it down further. For an exact estimate, see the hourly and salary pages, such as $25 an hour or $60,000 a year, which show the tax line by line.
Why your net pay can change
- You changed your W-4, or your pre-tax benefits changed.
- You passed the Social Security wage base late in the year, so that 6.2% stopped.
- Overtime or a bonus raised gross pay. Bonuses can be withheld differently from regular pay; see the bonus tax calculator.
- Your state or local tax rate changed.
Reading the year-to-date column
Most pay stubs show each line twice: this period and year to date (YTD). YTD gross minus YTD net equals everything taken out so far this year. Divide YTD taxes by YTD gross to see what share of your pay has gone to tax. If that share looks far off from your tax bracket, check your W-4.
Sources
- CFPB: Understanding your pay stub
- IRS: 2026 inflation adjustments and standard deduction
- IRS Rev. Proc. 2025-32 (2026 tax brackets)
- SSA: contribution and benefit base ($184,500 for 2026)
- SSA: Social Security and Medicare tax rates
- IRS Topic 560: Additional Medicare Tax
Figures last reviewed October 2026.