What Is the Meaning of Gross Pay?

What Is the Meaning of Gross Pay?

What Is the Meaning of Gross Pay?

An employee’s gross pay is the money earned from working before taxes and other deductions. An employee’s gross pay includes the money they earn from commissions, overtime and tips.

To calculate gross pay, employers multiply the number of hours worked by an employee’s hourly rate.

To determine net pay, employers subtract taxes, social security and other deductions from their employee's gross pay. Net pay, also known as take-home pay, is the amount of money employees see on their actual checks.

Employees who earn a salary use their fixed pay rate, before taxes and other deductions, as their gross pay.