Q:

What is a net salary?

A:

Quick Answer

Net salary, also known as take-home pay, is the amount of a person's gross income that remains after all payroll taxes and deductions are removed by the employer. It is called take-home pay because it is the actual amount of the paycheck or direct deposit.

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Full Answer

Typical amounts removed from gross pay include federal and state income tax withholdings, retirement contributions, Social Security taxes, Medicare taxes and insurance premiums paid pre-tax by the employee. Typical employee pay stubs show how much is deducted to determine the final net salary. Workers also receive W-2 statements at the end of the year that indicate gross pay, amounts for different deductions and net pay.

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