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Terms and Definitions

What is net pay?

Updated: May 20, 2024

Net pay definition and meaning

Net pay is an employee’s total earnings in a period, after all taxes and deductions (voluntary and/or involuntary) have been subtracted from gross pay. It is also known as take-home pay and is the money they actually “take home” after payroll deductions.

 

More about net pay

Here’s one way an employee can calculate the total amount of money deducted from a paycheck. Add up the amounts calculated for FICA taxes, income taxes, and other deductions, then subtract that total amount from your annual gross pay. The dollar amount left is considered net pay.

Using net pay in a sentence

“After I calculated my net pay so far for the year, I felt much better about moving to a new company.”

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