What is Gross Pay?

Updated on April 5, 2022

  1. OnPay
  2. Payroll Software
  3. Terms and Definitions
  4. Gross Pay

Gross pay definition and meaning

Gross pay – or gross wages or gross income – is the salary or hourly rate an employer pays an employee. It reflects an employee’s total earnings in a pay period before deductions, such as local, state, and federal taxes.


More about gross pay

Generally, federal and state taxes, and sometimes local taxes, reduce gross pay. Voluntary and involuntary deductions like medical benefits and insurances, or garnishments and levies can affect gross pay as well. The result is called net pay.


There are situations where the total of an employee’s taxes and deductions may be greater than their gross wages, resulting in negative net pay. This can leave employers with the task of figuring out which deductions are allowed to be reduced in order to reach a zero paycheck. Accountants and payroll services are generally an employer’s best bet for being prepared for complications such as this.

Using gross pay in a sentence

“I set my 401(k) contribution to 20% of my gross pay, which does make for a very strict budget, but it’ll pay off when I’m ready to retire.”

Top-rated payroll


It’s easy to get started

Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.