Gross to Net Pay Explained 2026

Gross to Net Pay Explained, Step by Step

Your gross salary is the headline number; your net is what you actually take home. This guide walks the path between them and shows your 2026 net with a worked example.

● Step-by-step method ● Worked example ● 2026 federal data

📘 Gross → net

The four steps

How gross becomes net

Getting from gross to net is the same four-step subtraction every payroll system runs:

Start with gross pay — your full salary or wages before anything is taken out.
Subtract pre-tax deductions — traditional 401(k), HSA and most health premiums lower your taxable wages.
Subtract taxes — federal income tax (on taxable income after the standard deduction), 6.2% Social Security, 1.45% Medicare and any state/local tax.
Subtract post-tax items — Roth contributions, certain insurance, garnishments. What remains is your net pay.

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Worked example — $75,000 single, no state tax: After the $16,100 standard deduction, federal tax is roughly $8,200; FICA is about $5,738. Net take-home is around $61,000, or about $5,090 a month — roughly 81% of gross.

Why two people with the same salary differ

Filing status, state of residence and pre-tax elections all move the net figure. A Texan and a Californian on $75,000 can differ by thousands because of state tax. Compare with your state page or run the full paycheck calculator. For the interactive tool, see our gross-to-net calculator.

Gross to Net Explained FAQ

What is the difference between gross and net pay?

Gross pay is your total earnings before any deductions. Net pay (take-home) is what remains after federal income tax, Social Security, Medicare, state tax and any benefit deductions are subtracted. Net is the amount deposited in your bank account.

How do I calculate net pay from gross?

Subtract pre-tax deductions from gross to get taxable wages, then subtract federal income tax, 6.2% Social Security, 1.45% Medicare and any state tax, and finally any post-tax deductions. The calculator above does this automatically for 2026.

What percentage of gross is net pay?

For a typical US worker, net pay is roughly 70–85% of gross, depending on income, filing status, state and pre-tax contributions. Higher earners and high-tax states keep a smaller share.

Does net pay include 401(k) contributions?

Take-home pay is what is left after taxes. A pre-tax 401(k) contribution reduces both your taxable income and your take-home, but the money goes into your retirement account rather than being lost to tax.