Net Pay

paycheck

Also known as: take-home pay, net income, after-tax pay

Updated · Written and reviewed by Konstantin Iakovlev

Detailed explanation

Net pay = Gross − Federal tax − State/Local tax − FICA − Pre-tax deductions − Post-tax deductions. The "net-to-gross" ratio matters most for budgeting: experts recommend aligning monthly fixed expenses (housing, debt) to net pay, not gross. Using a 401(k) increases gross but reduces net (income tax savings only partly offset the cash out of pocket). California paychecks for a $100K worker net ~$67K-$72K depending on filing status and SDI. Florida $100K worker nets closer to $77K-$82K (no state income tax).

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Related paycheck terms

FICA (Federal Insurance Contributions Act)

FICA is the federal payroll tax funding Social Security and Medicare. Employees pay 6.2% Social Security on wages up to ...

Gross Pay

Gross pay is your total wages before any deductions — taxes, retirement contributions, health insurance premiums, etc. A...

Pre-Tax Deduction

A pre-tax deduction reduces your taxable income before federal income tax (and often FICA) is calculated. Common example...

Overtime Pay

Overtime pay is 1.5× regular wage for non-exempt employees who work over 40 hours per week (federal FLSA). Some states (...

Form W-4

Form W-4 (Employee's Withholding Certificate) tells your employer how much federal income tax to withhold from each payc...

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