Gross vs. Net Pay: Why Your Paycheck Is Smaller Than You Think
If your first paycheck felt smaller than expected, you're not alone. This beginner-friendly guide explainsgross vs net pay, FICA, Medicare, and state taxes so you know exactly where the money goes.
See your exact paycheck breakdown
Estimate your take-home pay by state, pay frequency, and deductions.
Gross pay: the headline number
Gross pay is your salary or hourly wages before any deductions. It's the number in your offer letter, but it is not what hits your bank account.
Net pay: your real spending power
Net pay is what's left after taxes and payroll deductions. For many early-career employees, net pay is25% to 35% lower than gross pay.
FICA and Medicare: the paycheck staples
FICA taxes fund Social Security and Medicare. That means a 6.2% Social Security tax and 1.45% Medicare tax on most wages. These add up quickly on every paycheck.
State taxes, benefits, and other deductions
State income tax varies from 0% to over 10%. Add health insurance, commuter benefits, and retirement contributions, and your paycheck can shrink further.
Anand Godar
Financial engineer and founder of QuantCurb. Former fintech data scientist building institutional-grade calculators for everyday wealth decisions.
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