© 2026 CoAd. All rights reserved.
Net income is the amount of money left after taxes, deductions, and other applicable expenses are subtracted from gross income. For employees, it is commonly referred to as take-home pay.
Net income is the amount of money that remains after taxes, deductions, and other applicable expenses are subtracted from gross income. In payroll, an employee's net income is the amount they actually receive in their paycheck, often called net pay or take-home pay.
To calculate net pay, an employer starts with the employee's gross earnings and subtracts required taxes and other payroll deductions. These may include federal and state income taxes, Social Security and Medicare taxes, health insurance premiums, retirement contributions, and other authorized deductions.
For example, an employee may earn $2,000 in gross pay for a pay period but receive a smaller amount after taxes and deductions are taken out. The amount that reaches the employee's bank account or paycheck is their net pay.
Net income can also mean something different in a business context. For a business, net income generally refers to the amount left after expenses are subtracted from revenue. Because the term can be used in both payroll and accounting, the meaning depends on the context.
Gross income is the total amount earned before taxes and deductions. Net income is what remains after those amounts are taken out. For an employee, net income is generally the amount they take home.
Deductions may include federal, state, and local taxes, Social Security and Medicare taxes, insurance premiums, retirement contributions, garnishments, and other authorized payroll deductions.
In a payroll context, yes. Net income or net pay is the amount an employee receives after applicable taxes and deductions have been withheld from gross pay.
No. For employees, net income generally refers to pay remaining after payroll deductions. For businesses, net income typically refers to revenue remaining after business expenses are subtracted.