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Gross Pay vs Net Pay: What's the Difference?
Gross pay is your total earnings before any deductions. For hourly workers, it's your hourly rate × hours worked. For salaried employees, it's your annual salary divided by pay periods.
Net pay (take-home pay) is what you actually receive after all deductions are subtracted. The gap between gross and net can be 20–40% depending on your income level and state.
How to Calculate Take-Home Pay from Hourly Wage
- Calculate annual gross: Hourly rate × hours/week × 52 weeks
- Subtract pre-tax deductions: 401k, health insurance, FSA
- Apply standard deduction: $15,000 (single, 2026) or $30,000 (married)
- Calculate federal income tax using progressive brackets
- Calculate FICA: Social Security (6.2%) + Medicare (1.45%)
- Calculate state income tax based on your state's rate
- Divide by pay periods to get per-paycheck take-home
Take-Home Pay by Hourly Rate (2026, Single, No State Tax)
| Hourly Rate | Annual Gross | Annual Net | Biweekly Paycheck |
|---|---|---|---|
| $15/hr | $31,200 | ~$26,100 | ~$1,004 |
| $20/hr | $41,600 | ~$33,800 | ~$1,300 |
| $25/hr | $52,000 | ~$41,200 | ~$1,585 |
| $30/hr | $62,400 | ~$48,400 | ~$1,862 |
| $40/hr | $83,200 | ~$62,100 | ~$2,388 |
| $50/hr | $104,000 | ~$75,500 | ~$2,904 |
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These estimates assume 40 hours/week, 52 weeks/year, single filing status, standard deduction, and no state income tax. Actual take-home pay varies based on your specific situation.
Understanding Your Pay Stub
Every paycheck stub shows the same basic structure:
- Gross Pay: Total earnings this period
- Federal Withholding: Estimated federal income tax based on your W-4
- State Withholding: State income tax (if applicable)
- Social Security: 6.2% of gross (up to $176,100 annual wage base)
- Medicare: 1.45% of gross (no cap)
- Pre-tax Deductions: 401k, health insurance, FSA — reduce taxable income
- Post-tax Deductions: Roth 401k, life insurance — don't reduce taxable income
- Net Pay: What hits your bank account