Gross Pay

Gross pay is the total amount an employee earns before taxes, benefits, and other payroll deductions are taken out. It is the starting point for calculating an employee's paycheck.

For hourly employees, gross pay generally starts with the number of hours worked multiplied by the employee's pay rate. Overtime, bonuses, commissions, shift differentials, tips, and other forms of compensation may also be included. For salaried employees, gross pay typically begins with the portion of the employee's salary assigned to that pay period.

Once gross pay is calculated, the employer subtracts applicable taxes and deductions. These can include federal and state income taxes, Social Security and Medicare taxes, health insurance premiums, retirement contributions, garnishments, and other authorized deductions. The amount left after those deductions is the employee's net pay, or take-home pay.

Gross pay and gross income are closely related, but they are not always the same thing. Gross pay usually refers specifically to earnings from an employer, while gross income can include additional sources of income outside of payroll.

Frequently asked questions

What is included in gross pay?

Gross pay can include regular wages or salary, overtime, bonuses, commissions, tips, shift differentials, and other compensation earned during the pay period.

What is the difference between gross pay and net pay?

Gross pay is what an employee earns before taxes and deductions. Net pay is what remains after those amounts are taken out and is the amount the employee actually receives.

Is gross pay the same as gross income?

Not always. Gross pay generally refers to earnings from employment, while gross income can include other taxable income such as self-employment earnings, interest, or rental income.

Where can employees find their gross pay?

Gross pay is typically listed on an employee's pay stub along with taxes, deductions, and net pay for the pay period.