Gross Pay vs Take-Home Pay

Gross pay is what you earn before anything is taken out. Take-home pay (net pay) is what actually lands in your account. For most US workers the gap is 20–35% of gross, depending on income, state, and benefit elections.

take-home = gross − pre-tax deductions − taxes withheld − post-tax deductions

What comes out of a US paycheck

1. Pre-tax deductions

Taken before income tax is calculated, so they also lower your taxable wages: traditional 401(k) or 403(b) contributions, HSA and FSA contributions, and health, dental, and vision premiums paid through a Section 125 plan. Note that 401(k) contributions still have Social Security and Medicare taken on them — only the health-type deductions escape FICA.

2. Federal income tax withholding

A running prepayment toward your annual federal tax bill. Your employer uses the IRS Publication 15-T method and your Form W-4 (filing status, dependents, other income, extra withholding). It is an estimate — the exact figure is settled on your tax return, which is why you get a refund or owe.

3. FICA — Social Security and Medicare

• Social Security: 6.2% of wages up to the annual wage base ($184,500 for 2026). Nothing above that.
• Medicare: 1.45% of all wages, no cap.
• Additional Medicare: an extra 0.9% on wages over $200,000 in a year.

4. State (and sometimes local) income tax

Most states withhold income tax; nine do not tax wage income at all. Some cities — New York City, Yonkers, and Philadelphia among them — add a local tax. This is the single biggest reason two people on the same salary have different take-home.

5. Post-tax deductions

Taken after tax: Roth 401(k) contributions, disability and some life insurance, union dues, charitable payroll giving, and wage garnishments. Garnishments follow a legal priority order — child support first, then federal tax levies, then other court orders.

A worked example

Single filer, paid $2,500 gross semimonthly ($60,000/year), in a state with no income tax, contributing 5% to a traditional 401(k) and $100 to health premiums:

FICA is calculated on $2,400 because the health premium is FICA-exempt but the 401(k) is not. Figures are illustrative — your W-4 entries change the federal withholding.

How to legitimately increase your take-home

• Fix an inaccurate W-4. Over-withholding gives you a big refund but a smaller paycheck all year. The IRS Tax Withholding Estimator can dial it in.
• Use pre-tax benefits you would pay for anyway — HSA, FSA, commuter benefits — so those dollars skip income tax (and FICA, for the health-type ones).
• Review post-tax deductions for anything you no longer need.

Cutting your 401(k) raises take-home now but reduces retirement savings and the tax deferral — a trade-off, not a free gain.

Reading a pay stub

A stub shows gross for the period, each deduction on its own line with a year-to-date column, and net pay at the bottom. The line-by-line walkthrough is in how to read a pay stub.

Estimate your take-home

• Paycheck Calculator — one paycheck with the full deduction stack itemised, or choose "An annual salary" for take-home per year, month and paycheck.

Both support US tax year 2026: federal, FICA, and the states California, New York, Illinois, and Pennsylvania, plus the no-income-tax states. Other states, local taxes, and other countries are not yet modelled — the tools say so rather than guessing.

Frequently asked questions

Why is my paycheck so much less than my salary ÷ 24?

Because salary ÷ 24 is gross. Subtract federal tax, FICA (7.65%), state tax, and your benefit elections to get net.

Does everyone lose the same percentage?

No. It rises with income (higher brackets) and varies a lot by state — a high earner in California keeps a smaller share than the same earner in Texas.

Sources

• IRS Publication 15-T — Federal Income Tax Withholding Methods
• Social Security Administration — Contribution and Benefit Base
• IRS — Tax Withholding Estimator

The full list of state withholding sources and exact figures is on the Methodology & Sources page.