What is net pay? Your take-home pay explained
Net pay is take-home pay: what an employee actually receives after taxes, retirement contributions, benefit premiums and other deductions are subtracted from gross pay. On a $60,000 salary paid every two weeks, a Texas employee with a 5% 401(k) takes home $1,815.77 of a $2,307.69 check, using an illustrative $200 of federal income tax. The biggest swing factors are income tax and pre-tax benefits.
Net pay is the amount an employee receives after all taxes and deductions are subtracted from gross pay.
On this page
From gross to net, line by line
| Line | Amount |
|---|---|
| Gross pay ($60,000 / 26) | $2,307.69 |
| 401(k), 5% pre-tax | minus $115.38 |
| Social Security, 6.2% of gross | minus $143.08 |
| Medicare, 1.45% of gross | minus $33.46 |
| Federal income tax (illustrative) | minus $200.00 |
| Net pay | $1,815.77 |
Rates from IRS Topic 751 (2026). Federal income tax is an illustrative figure; the real amount comes from the W-4 and IRS Publication 15-T. Texas has no state income tax. Checked October 2026.
Social Security and Medicare are fixed at 6.2% and 1.45% in 2026. Federal income tax depends on the employee's Form W-4 and the IRS tables, so it is shown as an illustrative figure. In a state with an income tax, there is one more line, and a few states also withhold for disability, paid family leave or unemployment; see SUTA for the three states in our data that withhold unemployment tax from workers.
The order deductions come out
- Start with gross pay.
- Subtract pre-tax deductions: traditional 401(k), and health premiums, HSA and FSA through a cafeteria plan. Per IRS Publication 15, 401(k) deferrals still count for FICA; cafeteria plan items usually do not.
- Subtract taxes: federal income tax, Social Security, Medicare, state and local taxes.
- Subtract after-tax deductions: Roth 401(k), wage garnishments, union dues and similar.
- What remains is net pay.
Raising a 401(k) contribution by $100 a paycheck lowers net pay by less than $100, because it also lowers income tax withholding. The 2026 401(k) deferral limit is $24,500, or $32,500 at age 50 and up.
Net pay for employers
Net pay is what your payroll account must cover on payday by direct deposit or check. The withheld taxes are deposited separately on the IRS schedule, monthly or semiweekly. Your full cost is gross pay plus employer taxes and benefits, which is higher than gross, not lower; run it through the employee cost calculator. If you are choosing a provider to run this, compare payroll software by score and price and see ways to pay employees.
Frequently asked questions
What is net pay?
What does net pay mean?
How do I calculate take-home pay?
Why is my net pay different from one paycheck to the next?
Is net pay the same as take-home pay?
Sources (4)
- IRS: Topic 751, Social Security and Medicare withholding rates (updated Sep 24, 2026) (checked Oct 16, 2026)
- IRS: Publication 15 (Circular E), Employer's Tax Guide, for use in 2026 (checked Oct 16, 2026)
- IRS: IR-2025-111: 401(k) limit increases to $24,500 for 2026 (checked Oct 16, 2026)
- Social Security Administration: 2026 COLA fact sheet (checked Oct 16, 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.