Gross vs net pay on a pay stub, line by line
Gross pay is what an employee earned in the period before anything is taken out. Net pay is what remains: gross minus taxes, minus pre-tax and post-tax deductions, plus any non-taxable reimbursement added at the end. On a correct stub that arithmetic closes to the cent, which gives a reviewer a quick test before moving on to income.
Published . General information, not lending, legal or tax advice.
From earnings to take-home, in one pass
Every stub builds net pay in the same order. Earnings lines add up to gross. Pre-tax deductions come off, then taxes, then post-tax deductions, and any reimbursement is added back at the end. The order changes taxable wages but not the final subtraction, so for a net-pay check every line just has to be counted once. Income calculations commonly start from gross, so a stub whose net will not reconcile deserves a second look before its gross is relied on.
The stub below is made up, with round figures. Pay stub deductions explained covers the individual deduction lines, and pay stub arithmetic checks lists the other tests. Income calculations normally start from the gross figure, as in monthly income from pay stubs.
How to check gross against net
Use the current-period column, not year to date.
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Add the earnings lines
Regular, overtime, bonus, commission, paid time off and other pay. The total should equal the printed gross. For hourly lines, hours times rate gives the amount.
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Add the tax lines
Federal income tax, state and local tax, Social Security and Medicare. If the stub prints a total taxes line, it should equal the sum.
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Add the deduction lines
Pre-tax and post-tax together: retirement, health, garnishments and the rest. A printed total deductions line may include taxes, so check which.
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Add reimbursements shown after the taxes
Non-taxable additions such as mileage or expense reimbursements are not part of gross, but they are part of the net.
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Compute and compare
Gross minus taxes minus deductions plus reimbursements should equal printed net pay, within a cent or two of rounding.
A worked stub, line by line
Made-up biweekly figures, with illustrative tax amounts. The balance after the overtime row is gross pay, and the balance after the last row is net pay.
| Line | How it is figured | Amount | Balance |
|---|---|---|---|
| Regular pay | 80 hours × $30.00 | $2,400.00 | $2,400.00 |
| Overtime pay | 5 hours × $45.00 | $225.00 | $2,625.00 |
| 401(k), pre-tax | 6% of gross | −$157.50 | $2,467.50 |
| Medical premium, pre-tax | Flat per period | −$96.00 | $2,371.50 |
| Social Security | 6.2% × ($2,625.00 − $96.00) | −$156.80 | $2,214.70 |
| Medicare | 1.45% × ($2,625.00 − $96.00) | −$36.67 | $2,178.03 |
| Federal income tax | From the W-4 and tax tables | −$229.00 | $1,949.03 |
| State income tax | Per state rules | −$83.00 | $1,866.03 |
| Union dues, post-tax | Flat per period | −$24.00 | $1,842.03 |
| Mileage reimbursement | Non-taxable, added last | +$42.50 | $1,884.53 |
What goes wrong
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Reimbursements make net look too high
A mileage or expense line added after the taxes lifts net above gross minus deductions. Count it, or the stub looks off by exactly that amount.
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Total deductions that already include taxes
Some stubs fold taxes into total deductions and others list them apart. Subtract each line once.
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Employer contributions subtracted by mistake
An employer match or an employer-paid premium is often listed near the deductions. It is not taken from the employee's pay.
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Current and year-to-date columns swapped
Table layouts put both side by side. A YTD figure keyed into the current column is the most common reason net pay will not reconcile.
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Payroll taxes that are not 7.65 percent
Pre-tax health premiums are typically left out of the base, 401(k) deferrals are not, and Social Security stops at an annual wage cap. A small mismatch is expected.
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Imputed income in gross
Some stubs add a taxable non-cash item, such as certain employer-paid benefits, to gross and to withholding. Gross then exceeds the cash earned. The line is usually labelled.
How VerifyStub helps
VerifyStub reads gross, each tax and deduction line, reimbursements added after net, and net pay. It tests gross minus taxes minus deductions plus reimbursements against the printed net within $0.02 and shows the difference in dollars. It also checks that the earnings lines add up to gross and that the tax and deduction lines add up to any printed totals. A pass means the printed numbers agree with each other. Try the pay stub to CSV page (free: 1 file per day, up to 10 pages, no account) or see pricing.
Scope. VerifyStub checks arithmetic on the pay stubs you upload. It does not detect altered documents, verify employment or income, or give lending, legal or tax advice. Rules and policies differ by lender, program, landlord and jurisdiction.
Gross vs net pay: common questions
What is the difference between gross pay and net pay?
Gross pay is total earnings for the period before anything is taken out. Net pay is what remains after taxes and deductions, with any non-taxable reimbursement added. Net is usually the smaller figure.
Should income be calculated from gross or net?
Income for qualifying and screening is commonly stated as gross, because net depends on the person's withholding and benefit choices. The policy that applies decides, so use the figure it names.
Why is my net pay different from the amount deposited?
Net pay can be split across accounts or paid partly by check, and a stub may show a separate deposit line. Compare the deposits, added together, with net pay on the stub.
Why are Social Security and Medicare not exactly 7.65 percent of gross?
The rates are 6.2 percent and 1.45 percent of wages subject to each tax. Pre-tax health premiums through a cafeteria plan are typically excluded from that base, 401(k) deferrals are not, and Social Security stops at an annual wage base.
Can net pay be higher than gross pay?
Only if something is added after the taxes, such as a reimbursement, or if the stub corrects an earlier period. Otherwise a net figure above gross is a reason to compare the stub with the original.
How close does net pay have to be to the calculated figure?
Payroll rounds each line to the cent, so a difference of a cent or two is normal. VerifyStub treats a difference of $0.02 or less as a match and shows anything larger as a difference in dollars.
Do I need to check net pay if gross is correct?
Yes, it is a separate test. It shows whether the taxes and deductions printed on the stub account for the gap between gross and take-home. A mismatch usually points to a missed line or a misread digit.
Keep reading
Related guides, or all of the pay stub guides.
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Pay stub deductions
Pre-tax and post-tax, 401(k), health premiums and garnishments, and what each does to taxable wages and net pay.
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Pay stub arithmetic checks
The checks a reviewer runs on a stub, the allowance for each, and what a pass does and does not mean.
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Monthly income from pay stubs
The formula for weekly, biweekly, semimonthly and monthly stubs, with a worked table and the shortcuts that understate income.
Run the next stack of stubs through the checks
Free: 1 file per day, up to 10 pages, no account. One CSV row per stub, with the net-pay math and the YTD chain checked.
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