Gross pay is earnings before deductions; net pay is what reaches your bank account. Learn how to reconcile the difference using your own paystub.
Gross pay is your earnings before payroll deductions. Net pay, also called take-home pay, is the amount left after taxes, benefit contributions and other deductions. The difference is not necessarily all tax: retirement savings and insurance can reduce the deposit too. There is no reliable universal rule that everyone keeps 65–72% of salary.
Scope and review: Reviewed October 21, 2026. The definitions apply internationally, but the tax rules and USD examples below are for US employees in 2026. UK National Insurance, Canadian payroll deductions and other countries' systems have different rules. This is educational information, not a personal tax calculation.
Net pay = gross pay − employee taxes withheld − employee benefit contributions − other payroll deductions. Compare amounts for the same pay period. An annual offer, a monthly bank deposit and a biweekly paystub cannot be compared directly. A salary paid biweekly normally has 26 pay periods, while twice-monthly pay has 24.
Assume an employee earns $60,000 a year, paid in 12 equal monthly installments: $60,000 ÷ 12 = $5,000 gross per month. Assume all $5,000 is subject to Social Security and Medicare, year-to-date wages remain below the Social Security cap, and there is no Additional Medicare tax. For this fictional paystub, federal withholding is $500, state/local withholding is $150, the traditional 401(k) contribution is $250, and an after-tax insurance deduction is $100. These withholding and benefit amounts are illustrative inputs, not calculated tax rates or typical deductions.
Total deductions are $310 + $72.50 + $500 + $150 + $250 + $100 = $1,382.50. Net pay is $5,000 − $1,382.50 = $3,617.50. The take-home share is $3,617.50 ÷ $5,000 × 100 = 72.35%, and the deduction share is 27.65%. Those percentages describe only this assumed paystub; another employee can have a very different result.
For 2026, the employee Social Security rate is 6.2%, limited to $184,500 of covered annual wages. The employee Medicare rate is 1.45%, with no wage cap. Employers also withhold 0.9% Additional Medicare tax on wages they pay above $200,000 during the calendar year; final liability depends on filing status. Therefore, 7.65% is not a flat payroll-tax rate on every dollar for every employee. These rules come from [IRS Publication 15](https://www.irs.gov/publications/p15) and [IRS Topic 751](https://www.irs.gov/taxtopics/tc751).
Traditional employee 401(k) deferrals generally reduce federal income-tax wages, but remain subject to Social Security and Medicare. Roth employee deferrals generally remain subject to federal income tax too. An employer match is not an extra deposit in your take-home paycheck. Plan eligibility and vesting rules matter; a $1 employee contribution does not universally become $1.50 of net pay. See the [IRS retirement contribution withholding rules](https://www.irs.gov/retirement-plans/retirement-plan-faqs-regarding-contributions-are-retirement-plan-contributions-subject-to-withholding-for-fica-medicare-or-federal-income-tax).
Federal withholding is a prepayment toward the tax determined on your return. Your Form W-4, pay frequency, other income, deductions and credits affect the result. A marginal rate applies to the next slice of taxable income; an effective rate compares total tax with a defined income amount. Neither is automatically the percentage missing from your paycheck, because that gap also contains benefits and other deductions.
For eligible US employees and pension recipients with withholding, the [IRS Tax Withholding Estimator](https://www.irs.gov/individuals/tax-withholding-estimator) uses paystub and household information to help prepare a W-4 or W-4P. It does not estimate state/local tax and is not available to nonresident taxpayers. Check its eligibility instructions before using it. Changing withholding changes payments during the year, not the underlying tax rules.
Under the conditions in Publication 15, an employer may use the optional 22% federal withholding method on separately identified supplemental wages of $1 million or less, or use an aggregate method. The excess over $1 million has a different withholding rule. Social Security, Medicare and state/local withholding may also apply. The 22% figure is not a special final tax rate on all bonuses. A refund is not guaranteed: reconciliation depends on your full-year tax and payments.
Use the linked Percentage Calculator in ‘X is what % of Y’ mode to compare your actual net pay (X) with your actual gross pay (Y). For the example above, enter 3617.50 and 5000 to obtain 72.35%. This checks a ratio only: it does not calculate payroll tax or replace the IRS estimator. No existing LaliAI tax tool should be treated as an official withholding determination.
Does net pay include my employer's retirement match? Usually no: employer contributions go into the plan, not your bank deposit. Check your plan statement separately.
Why did my net pay change without a raise? Compare withholding elections, benefit deductions, retirement contributions, taxable benefits and year-to-date wage limits with the previous paystub.
Can I use this US example in another country? Use the gross-minus-deductions method, but substitute the actual payroll rules and amounts for your jurisdiction. US rates are not international rates.