A job offer says $75,000. Your brain hears $6,250 a month. Then the first paycheck arrives and it's a few hundred dollars short of that — every single time. The gap between the salary you're quoted and the money you can actually spend has a name: the difference between gross and net pay.
This guide walks through every layer that comes out, in order, so you can predict your real number. To see it for your own salary, use the take-home pay calculator.
Gross vs. net: the core idea
Gross pay is your full salary or hourly earnings before anything is removed. Net pay — your take-home — is what remains after taxes and deductions. Between them sit four layers:
- Federal income tax
- FICA (Social Security + Medicare)
- State and local income tax
- Pre-tax deductions (retirement, health, etc.)
Layer 1: Federal income tax
The U.S. uses progressive brackets: income is taxed in slices, with each slice taxed at its own rate. Your employer estimates your annual tax from your W-4 and withholds a slice each paycheck.
Crucially, your standard deduction (in 2025, $15,000 single / $30,000 married filing jointly) is subtracted first — so a chunk of your income is taxed at 0%. Only the remainder runs through the brackets. We unpack this in tax brackets explained.
Layer 2: FICA
FICA funds Social Security and Medicare and is a flat payroll tax:
| Tax | Employee rate | Notes |
|---|---|---|
| Social Security | 6.2% | Up to the annual wage cap ($176,100 in 2025) |
| Medicare | 1.45% | +0.9% on wages above $200,000 |
| Total | 7.65% | Matched by your employer |
Unlike income tax, there's no standard deduction shielding FICA — it applies to dollar one of wages. Read more in FICA taxes explained.
Layer 3: State and local tax
This is the layer that makes two people with identical salaries take home very different amounts. Nine states levy no income tax at all; others reach into the high single digits or beyond. Some cities add their own income tax on top. See our breakdown of the no-income-tax states.
Layer 4: Pre-tax deductions
These come out before income tax is calculated, so they lower both your take-home and your taxable income:
- 401(k)/403(b): retirement savings
- HSA/FSA: health and medical spending
- Health insurance premiums: usually pre-tax
How to read your pay stub
Your stub lists gross pay at the top, then itemizes each deduction. Watch for:
- YTD columns: year-to-date totals — useful for tracking Social Security cap and tax paid.
- Pre-tax vs. post-tax: Roth 401(k) and some insurance come out after tax.
- Imputed income: the taxable value of certain perks.
Frequently asked questions
Get an instant estimate with the paycheck take-home calculator.
What percentage of my paycheck goes to taxes?
For a typical middle-income worker, expect roughly 25–35% of gross to disappear to federal tax, FICA, and state tax combined — higher in expensive, high-tax states and lower in no-income-tax states.
Why is my first paycheck at a new job smaller?
Payroll often annualizes your first check, and benefits/withholding may not be fully set up. It usually normalizes within a cycle or two.
Does a 401(k) contribution lower my taxes?
Yes — traditional 401(k) and HSA contributions come out before income tax is calculated, reducing your taxable wages.