Glossary term
Gross pay
Total earnings before any deductions.
Definition
Gross pay is the total compensation earned in a pay period before any tax withholding or deductions are subtracted. For salaried employees, gross pay is the annual salary divided by the number of paychecks per year. For hourly employees, gross pay is hours worked multiplied by the hourly rate, plus any overtime, shift differentials, or bonuses earned in the period. Gross pay is the figure used for benefits eligibility tests, retirement-plan contribution limits, and Social Security wage-base calculations. Tax withholding and deductions reduce gross pay to arrive at net (take-home) pay.
Example
An employee earning $26/hour who worked 80 hours has $2,080 in gross pay before taxes.
Related terms
- Pay period — The recurring window of time covered by a single paycheck.
- Pay frequency — How often paychecks are issued.
- Payday — The calendar day wages are deposited.
- In arrears — Wages paid after the pay period ends.
- Biweekly — Every other week — 26 paychecks per year.
- Semimonthly — Twice per month on fixed dates — 24 paychecks per year.
See also
- Pay schedule calculator — convert salary to per-paycheck amount
- Pay frequencies primer — weekly, biweekly, semimonthly, monthly
- Frequently asked questions