Gross pay is what you earn. Net pay is what you keep. The difference can be 25–35% of your salary, and understanding it is the foundation of realistic budgeting.
Gross Pay
Your gross pay is your total earnings before any deductions. For salaried workers, it's your annual salary divided by your pay periods. For hourly workers, it's hours worked times your hourly rate.
Net Pay (Take-Home)
Net pay is what actually deposits into your bank account. It's your gross pay minus:
- Federal income tax (withheld based on your W-4)
- FICA (7.65% — Social Security and Medicare)
- State and local income tax (if applicable)
- 401(k) and other pre-tax retirement contributions
- Health, dental, and vision insurance premiums
- HSA or FSA contributions
- Post-tax deductions (gym, life insurance, garnishments)
Why the Gap Matters
If you budget based on gross pay, you'll overspend by 25–35%. Always use net pay for budgeting. A $75,000 salary might only put $4,600/month in your account — that's the number you can actually spend.
How to Estimate the Gap
A rough rule: expect to keep about 70–75% of gross pay as a single filer with standard deductions. Married filers typically keep 75–80%. High earners keep less; low earners keep more.
See your exact gross-to-net breakdown with the Take-Home Pay Calculator.