Understanding Your Paycheck: Gross vs. Net Pay and Every Deduction

Gross pay vs. net pay

Gross pay is your salary before anything is taken out. Net pay — your "take-home" — is what lands in your account after taxes and deductions. The gap between the two is often 25–35% of gross pay, which surprises many first-time earners.

The deductions, line by line

• Federal income tax: withheld based on your W-4 and the IRS brackets. It is progressive — only income above each threshold is taxed at the higher rate.
• FICA: 6.2% for Social Security (up to a wage cap) plus 1.45% for Medicare — 7.65% total.
• State income tax: varies from 0% (e.g. Texas, Florida) to over 10% (e.g. California) at the top.
• Pre-tax deductions: 401(k) contributions, health insurance, and HSA/FSA reduce your taxable income.

Why your effective rate is lower than your bracket

Being "in the 22% bracket" does not mean you pay 22% on everything. Only the dollars above the bracket threshold are taxed at 22%; the rest is taxed at lower rates. Your effective rate — total tax ÷ total income — is always lower than your top marginal rate.

Estimate yours

Use our Take-Home Pay Calculator to see a quick estimate of your net pay after federal tax, FICA, and state tax. Pair it with the Income Tax Calculator to understand your federal liability in detail.