When you receive a job offer or calculate your salary using a tool like ours, the figures shown are typically gross income — before any taxes or deductions are applied. Understanding the difference between gross and net pay is essential for accurate budgeting and financial planning.
What is gross salary?
Gross salary is your total earnings before any deductions. It's the number on your job offer letter, the figure used in salary negotiations, and what our calculator shows. It includes base pay, overtime, bonuses, and any other regular compensation.
What is net salary?
Net salary (also called "take-home pay") is what you actually receive after all deductions have been taken out. This is the amount that lands in your bank account on payday.
What reduces gross to net?
Income tax
The largest deduction for most people. Tax rates vary significantly by country, state/province, and income level. In the US, federal income tax ranges from 10% to 37% depending on income bracket.
Social security / national insurance
Contributions to national pension and healthcare systems. In the US, Social Security is 6.2% and Medicare is 1.45% of gross wages (up to applicable limits).
Health insurance premiums
If your employer offers health insurance and deducts premiums from your paycheck, this reduces your net pay. These deductions are often pre-tax, which reduces your taxable income.
Retirement contributions
401(k), pension, or other retirement contributions deducted from your gross pay. Pre-tax contributions reduce taxable income; post-tax (Roth) do not.
How much less is net vs. gross?
As a rough guide for US employees earning $40,000–$80,000 annually, net pay is typically 65–75% of gross pay. Higher earners see a larger gap due to progressive tax rates.
| Gross annual | Estimated net (US) | Take-home % |
|---|---|---|
| $40,000 | ~$32,000 | ~80% |
| $60,000 | ~$46,000 | ~77% |
| $80,000 | ~$59,000 | ~74% |
| $100,000 | ~$72,000 | ~72% |
Why our calculator shows gross figures
Tax rules vary enormously between countries, states, and individual circumstances. Rather than provide potentially misleading net figures, our Hourly Salary Calculator shows gross income so you can make fair comparisons across offers — then consult a tax professional or country-specific tool for your estimated take-home pay.