2026 rates · Figures computed from our tax engine
Gross pay is the number in your offer letter. Net pay is the number in your bank account. The definition takes one sentence; the useful question is how big the gap is, and that turns out to depend on two things almost nobody accounts for when they accept a job: how much you earn, and which state you work in.
Gross pay
Everything you earned in the period before anything is removed: base salary or hours worked, plus overtime, bonuses, commission, and tips. It is the top line of your pay stub and the figure used in most income requirements.
Net pay
What is left after taxes and deductions — the amount actually deposited. It is the bottom line of your stub, and the only number that matters for what you can spend.
Payroll removes things in a specific sequence, and the order matters because it changes what later items are calculated on. Using $60,000 in California as a worked example:
74.7% of gross survives — before any benefit deductions.
Pre-tax deductions come out first. Health, dental and vision premiums are removed before tax is calculated, which is why they cost you less than their sticker price. Traditional 401(k) contributions reduce income tax but not FICA. Post-tax deductions — Roth contributions, garnishments, union dues — come out last and reduce net pay dollar for dollar.
We ran each salary through federal tax and FICA, then through every state, and took the best and worst outcome. Two patterns fall out that a definition never shows you:
| Gross salary | No state tax | Highest-tax state | Difference |
|---|---|---|---|
| $40,000 | $34,311 (85.8%) | $30,351 (75.9%) | $3,960 |
| $60,000 | $50,381 (84.0%) | $44,441 (74.1%) | $5,940 |
| $80,000 | $64,908 (81.1%) | $56,988 (71.2%) | $7,920 |
| $100,000 | $78,978 (79.0%) | $69,078 (69.1%) | $9,900 |
| $150,000 | $113,542 (75.7%) | $98,692 (65.8%) | $14,850 |
First, the share you keep falls as you earn more. At $40,000 about 85.8% of gross survives federal tax and FICA; at $150,000 it is 75.7%. That is progressive brackets working as designed, but it means a raise never lands in full — see our pay raise calculator for what a specific one is worth after tax.
Second, the state gap widens with income. At $40,000 the difference between the best and worst state is $3,960 a year. At $150,000 it is $14,850 — larger than many people's annual raise, decided entirely by which side of a state line they work on.
Work out your own net pay
Enter your salary, state, pay frequency and deductions to see the exact gap between gross and net on your paycheck.
Open Paycheck Calculator →| Situation | Use | Why |
|---|---|---|
| Rental application | Gross | Landlords size rent against gross annual income |
| Mortgage application | Gross | Underwriting ratios are built on gross |
| Personal budgeting | Net | Only net is spendable |
| Comparing job offers | Net, minus job costs | Gross hides state tax and benefit differences |
| Negotiating salary | Gross | But work backwards from the net you need |
The last two are where people lose money. If you know the take-home you need, our net to gross calculator tells you the salary to ask for, and the offer comparison tool shows why the higher gross frequently loses.
Each salary was run through the 2026 federal brackets with the single-filer standard deduction, Social Security and Medicare at statutory rates, and each state's income tax. The tables are generated by the same functions our calculators call. State tax is modelled as a flat effective rate, so treat the state comparison as directionally right rather than bracket-exact, and note that no benefit deductions are included — full detail and limitations are on our methodology page.
What is the difference between gross pay and net pay?
Gross pay is what you earn before anything is taken out — the number in your offer letter. Net pay is what actually reaches your bank account after taxes and deductions. The gap is typically 20-35% of gross.
How much of my gross pay do I actually keep?
It depends on income and state. Our computed figures for a single filer: about 84.0% of a $60,000 salary survives federal tax and FICA, falling to roughly 74.1% in the highest-tax state we model. The share you keep drops as income rises, because federal brackets are progressive.
Why is my net pay lower than a calculator said?
Most online estimates only subtract taxes. Real pay stubs also carry health, dental and vision premiums, retirement contributions, and sometimes union dues, garnishments, or local taxes. Those are deductions, not taxes, and they can easily be another 10% of gross.
Does gross or net pay matter for a rental application?
Landlords almost always work from gross annual income, and the common rule of thumb is that rent should be under a third of it. Lenders vary — mortgage underwriting typically uses gross, while affordability checks may look at net. Read the request carefully before you send a number.
Which number goes on my tax return?
Neither exactly. Your W-2 Box 1 shows gross wages minus pre-tax deductions, which is why it is usually lower than your stated salary and does not match either the gross or net on your final pay stub.
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