Net Pay

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What is “net pay”? 

Net pay is commonly known as “take-home pay.” This is the amount workers receive once all the applicable payroll taxes and deductions have been taken. 

Gross Salary - Deductions = Net Pay

Net pay is called take-home pay because this is the money that the worker is free to spend or save as they please. Other terms for net pay are “net wages” or “net income.”

Several factors can affect net pay such as voluntary and involuntary deductions. When we say involuntary deductions, these cannot be avoided by the worker. Involuntary deductions include Medicare tax, Social Security tax, federal and state income taxes, and wage garnishments. On the other hand, voluntary deductions are retirement contributions, contributions to a flexible spending account (FSA), and health insurance premiums.  

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